Sept. 9 （Bloomberg） -- The premium paid for aluminum in Europe, which rose to an 11-year high in July, fell this month because of increased supply from the Middle East, researcher CRU said.
The fee, added to the price of the lightweight metal for immediate delivery on the London Metal Exchange, declined to $115 a metric ton this month for deliveries to Rotterdam warehouses, analyst Marco Georgiou in London said yesterday. The premium in July was about $120, the highest since at least 1999, he said.
“Every year there is this seasonal slowdown in August and September” as factories typically close for maintenance work during holidays in the Northern Hemisphere, Georgiou said. He predicted a further increase in supply in the fourth quarter as production builds in the Middle East.
“We have more metal available in the market, so premiums should ease from levels we are currently seeing,” Georgiou said.
Supply probably will swell as output climbs at Emirates Aluminium Co., according to the analyst. The company is a venture of Abu Dhabi state-owned investment company Mubadala Development Co. and Dubai Aluminium Co., the largest Middle East aluminum smelter. Norsk Hydro ASA, Europe’s third-biggest producer, plans to make more of the metal at a smelter in Qatar.
European premiums doubled between January and July because stockpiled metal was tied up by financing accords, Georgiou said. The agreements now cover as much as 70 percent of LME aluminum inventories, down from about 80 percent in June, according to Deutsche Bank AG.
Aluminum stockpiles monitored by the LME have expanded almost sevenfold since the end of 2005 as supply outpaced demand. They fell yesterday for a 12th day to 4.42 million tons, 4.8 percent below the record level reached on Jan. 21.
The premium for duty-unpaid metal covers storage and costs such as insurance. Rotterdam is Europe’s biggest port. Immediate-delivery aluminum dropped $5.75, or 0.3 percent, to $2,130.75 a ton yesterday on the LME.
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