US Aluminum: Midwest Premium Stays Steady As Demand Stays Low

NEW YORK (Dow Jones)--The U.S. Midwest prompt aluminum premium over London Metal Exchange cash prices remains steady as demand stays low, although there are some stirrings of increased appetite for the metal. This week, observers saw the premium in a range from 3.75 cents to 4.25 cents, compared with 3.75 cents to 4.5 cents earlier this month. Jorge Vazquez, aluminum analyst with Harbor Intelligence, cited the premium in a range from 4.1 cents to 4.3 cents, with most of the business coming at 4.2 cents. However, it is a positive sign that the Midwest premium has remained stable even though primary aluminum prices are higher, Vazquez said. That could mean that demand isn't contracting as much as it was in 2008 and early 2009, Vazquez said. Some clients are reporting that volume is up, he said. Meanwhile, continued declines in North American aluminum output as producers scale back are supporting the premium, Vazquez said. Support is also coming as low demand encourages warehousing in London Metal Exchange-monitored storehouses. Mike Southwood, publications manager with CRU Group, sees the premium in a range from 3.75 cents to 4.25 cents. "Nothing really has changed," he said. However, over the longer term there is more upside potential for the premium than downside once demand recovers because of the lower availability of scrap and increased fees to remove metal from warehouses, Southwood said. LME cash aluminum was officially quoted at $1,451.00 to $1,452.00 per metric ton Wednesday, or about 65.81 cents to 65.86 cents per pound. Inventories of aluminum stored in LME warehouses rose 81,075 metric tons to 4,141,675 from Tuesday to Wednesday. The total is up from 3,880,325 metric tons one week ago. -By Matt Whittaker, Dow Jones Newswires; 201-938-5959; matt.whittaker@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=NhwuopvAd7kMEIhzm4B3dA%3D%3D. You can use this link on the day this article is published and the following day.