European aluminium premiums moved down on October 13, with duty-paid metal sliding $5 per tonne, as spot market demand dried up on a lack of clarity over end-user demand.
MB’s duty-paid, high-grade cash premium fell to $185-205 per tonne from $190-210, the latter being its record high and the level at which the premium has stood since April 27.
“Paid material, due to the uncertainty over the final market in Europe, is starting to drift lower,” a trader said. “Some consumers are knocking back demand leading to more material on the spot market, and premiums are starting to soften.”
Aluminium has remained relatively robust in the face of growing economic uncertainty in the eurozone, with contracted volumes still moving to consumers and prices holding up well compared with other base metals.
Three-month aluminium settled at $2,209/09.5 per tonne in the official session on the London Metal Exchange on October 13, from $2,436/37 at the start of September.
But, lacking assurances of end-user demand over the medium term, few buyers are active in the spot market.
“The situation is amplifying. More people want to sell and less to buy, so there’s some pressure,” a second trader said. “But look at the consumers – the big difference between now and 2008 is that they’re still going. The huge drop in demand [seen in 2008] won’t happen again.”
Though most business reported to MB went at a premium below $200 per tonne, some market participants are still reporting sales above that level.
“We’ve had nothing out below $200,” a supplier source said, adding that he was doing business at the top of the new range.
Meanwhile, duty-unpaid material remained at $120-140 per tonne, a level that has been bolstered by the incentives offered this year by warehouse companies to put metal in their sheds.
A large tender of South American material also supported the premium this week.
“Unpaid is rock steady, underpinned by a very bullish tender in Brazil,” the first trader said, adding that the 14,000-tonne tender was won at a price that nets back to an in-warehouse Rotterdam level at the top of the premium range.
“The market is softer at the moment, but that’s not to say things won’t pick up again soon,” he said.
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