Primary aluminum demand continues to swell, and with an estimated 75 to 90 percent of London Metal Exchange material locked up in financing deals, inventory-lean consumers in need of metal are paying the price.

Midwest spot premiums have climbed off the previously reported bottom of 6.1 cents per pound to a range of 6.2 to 6.5 cents per pound, the highest reported spread since May 2005, according to traders and producers of the light metal.

Market sources said the continued upward pressure on premiums can be partially traced to an increase in physical demand, which has ticked higher since the start of the year as the economy begins to thaw out.

"It's been busier. I don't want to portray it as some kind of 10-percent month-on-month growth, but we're not really seeing any further fall-offs," one domestic trader said. "We're talking...