The U.S. Midwest prompt aluminum premium over London Metal Exchange cash prices hasn't changed much over the last week, trading in a range of roughly 3.25 to 4.5 cents a pound, traders and analysts said.
A week ago, traders had listed a range of 3.5 to 4.5 cents.
"It's about in a 3.25 to 3.75 range," said one trader. "Markets have been rather quiet here."
London aluminum has moved slightly back into backwardation, after being relatively level in recent weeks, said the trader. "It looks like fund agendas back and forth," the contact added. But so far, it doesn't appear to be having much impact on the premium.
Jorge Vazquez, senior analyst with Harbor Intelligence, put the range at 3.5 to 4.5 cents, but said most business has been closer to 3.5.
It is up more than a penny from last month, when greater backwardation had caused some de-stocking of inventories. Still, the premium remains constrained by worries about U.S. demand and is well below the 6-cent level from early in the fourth quarter, said Vazquez.
He cited softer-than-forecast U.S. retail sales data this week and concerns about problems with the sub-prime mortgage market, which has prompted some "risk aversion."
"That has caused some speculative selling in the market, which has kept prices trading at the low end of the range of the past four weeks," he said. This, in turn, is also keeping the premium in check, said Vazquez.
LME cash aluminum was officially quoted at $2,735 to $2,736 per metric ton Wednesday, or about $1.2404 to $1.2408 per pound.
Inventories of aluminum stored in LME warehouses fell 350 metric tons to 797,925 from Tuesday to Wednesday. The total is down from 802,900 metric tons a week ago.
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