American Metal Market’s latest assessment of the spot P1020 premium
placed it at 10.25-10.75 cents per lb delivered to the Midwest on Tuesday January 16, up 9% from the previous assessment of 9.5-9.75 cents per lb.
The uptick is based primarily on speculation related to the outcome of Commerce’s Section 232 report and has little to do with actual spot demand, market participants told American Metal Market.
“With the 232, buyers are looking to cover their shorts,” one supplier source said.
Aluminium market participants had previously said that the possibility of stringent tariffs on aluminium imports could significantly alter the landscape
for aluminium prices in 2018.
US Commerce Secretary Wilbur Ross handed over the results
of the agency's Section 232 investigation into steel imports to President Donald Trump last week, leaving the president 90 days to determine a course of action on steel product tariffs. With the Section 232 also pending for aluminium imports, the market is watching developments closely.
Trucking rates also remain a source of concern due to new federal standards limiting the amount of times drivers are allowed to operate.
According to data from DAT Solutions LLC, average spot rates for trucking actually slipped slightly by 1-2 cents per mile over the past week. Despite this, rates remain elevated this year and average fuel costs continue to rise, reaching $3 per gallon.
If Chicago Mercantile Exchange (CME) Midwest premium futures are any indication, then spot premiums might have a distance to rise in the coming weeks. While CME’s January premium was listed at 10.25 cents per lb as of January 17, the premium for February has risen to 12.5 cents per lb and goes up to 12.6 cents per lb through year-end.
Meanwhile, the ongoing lockout
at the Aluminerie de Bécancour Inc (ABI) smelter in the Canadian province of Quebec, which began last week, is not expected to show much of a continued effect on current spot premiums. Rio Tinto plc is covering any potential shortfall in product stemming from the lockout at ABI by sending material to Canada
from overseas destinations, sources told American Metal Market this week.