The consensus that Metal Bulletin heard during the industry events of the last three months is that premiums are likely to stay high in the first quarter, but will start to fall back in the second or third quarter as warehouse financing deals expire and more material becomes available to the market.
At that point, LME prices will rise to become a larger part of the all-in price, and the market will return to some semblance of normality.
But that is assuming a lot, and it is also starkly reminiscent of what people were saying a year ago.
In the latter stages of 2013, consumers were delaying discussions about 2014 contracts because they thought premiums would drop sharply when the London Metal Exchange implemented new rules for warehouse companies requiring them to match deliveries in with deliveries out.
Metal Bulletin’s European duty-paid aluminium premium fell $40 to $230-240 per tonne after...