ALUMINIUM ARB INDICATOR: Window narrows further; weak demand limits opportunities

The aluminium import arbitrage between the United States and Asia narrowed for the second month in a row in October due softer US Midwest premiums and high ocean freight costs.

The differential between canceling aluminium without the 10% Section 232 tariff from London Metal Exchange-listed warehouses in Asia and shipping the material into the US Midwest narrowed slightly in October.
For material with the 10% duty, the arbitrate window remained relatively thin.
“Overall arbitrage opportunities have narrowed as a result of the underlying LME price strengthening, ocean freight continuing to firm up and the Midwest premium softening,” a market source said.
The three-month London Metal Exchange price peaked at $2,250 per tonne in early October – but has since fallen to below $2,000 per tonne.

For duty-free metal originating from warehouses in Singapore, the estimated arbitrage was at $277.89 per tonne for shipments of 10,000 tonnes (via break bulk shipments), down from $290.81...


Alice Mason

November 07, 2018

12:51 GMT