Premiums for physical aluminium in Europe slipped this week from record highs as traders cited weak demand and worries that it could weaken further as unrest in Libya and rising oil prices threatened economic growth.
Premiums for duty-paid metal in Rotterdam this week were at $190-205 a tonne over London Metal Exchange （LME） cash prices, traders said. This was down from $200-210 a tonne last week, which matched the December 2006 record at the highest level since Reuters records began in 1998.
"Premiums will start to slip," a trader in Europe said.
Metal from the Middle East that usually would go to Asia was being shipped to Europe, he added. "They can't sell it in Asia."
Traders quoted the premium for duty-unpaid aluminium in Rotterdam at $127-145 a tonne this week, versus last week's $130-140, which matched highs hit in late 2010.
Duty-unpaid premiums hit $170 in June 2010, their highest since Reuters records began.
Concerns about demand for the metal, used in transport and packaging, have grown this week as unrest in oil-producing Libya stoked a spike in oil prices, raising worries that inflationary pressures will hit metals consumption.
"Demand is going to plummet unless this Middle East situation is sorted out soon," the trader said.
Prices of aluminium for three-month delivery on the LME traded at $2,558 a tonne at 1148 GMT versus a close of $2,542 a tonne on Thursday.
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