FOCUS: Wide backwardation continues to fuel bearish summer for European ali premiums

A lingering backwardation in the July/August spread has pushed European aluminium premiums down past to levels last seen before the United States imposed sanctions on Russian producer Rusal.

The benchmark Rotterdam duty-unpaid P1020 in-warehouse premium fell to $90-100 per tonne on Tuesday June 19, down 39% from a high of $150-165 through April after the sanctions on Rusal. The duty-paid aluminium P1020A in-warehouse Rotterdam premium followed, falling to $160-175 per tonne on June 19 from a peak of $245-255 per tonne on April 20. Market participants expect the backwardated spreads to force premiums even lower over the summer. “I think we are coming to the slowest quarter- everything more or less has been covered for the third quarter… The big question is what the spread will do. Will [the backwardation] be over?” one trader in Europe said. “I don’t see the tight situation on the spreads going away after July.”...


Justin Yang

Hassan Butt

June 20, 2018

13:45 GMT