European Al consumers start booking for 2014 as warehouse clamour subsides

European aluminium consumers are now signing supply contracts for the first half of next year, after realising that any further effect on premiums from the London Metal Exchange’s new warehousing rules will not be felt until the second quarter of 2014.

“We’re on the way to finalising the first quarter,” a consumer said. “In some cases, where we have a good premium, we’re covering the first half. But not longer.”
Last year, a push by producers to shift customers on to contracts with floating premiums – rather than the traditional fixed number for a year's supply – saw negotiations stretch into November and December, away from the traditional mating season that runs over LME Week in October.

This year, premiums fell ahead of the mating season as a result of the LME’s announcement in July that it was changing its warehousing rules. The changes are likely to reduce warehouses' guaranteed rental income, which will cut the level of incentives they can afford to pay and therefore lower...

Published

Jethro Wookey

November 19, 2013

14:25 GMT

London