GLOBAL ALUMINIUM WRAP: Dec-Jan backwardation, year-end liquidations weigh on premiums worldwide

Global aluminium premiums found no respite from the bearish impact of the backwardation in London Metal Exchange forward price spreads, which widened further this past week, pressuring suppliers to offer discounts to liquidate stocks and minimize risk exposure before the end of the year.

Sustained backwardation on the LME, year-end liquidation push European premiums down US traders lower spot offers due to pressure to sell amid backwardation Asian premiums mostly stable on a lack of spot trading Brazilian producers’ discounted offers add to downward pressure on regional premiums Sustained backwardation, seasonal liquidation forces Rotterdam premium lower The sustained backwardation on the LME combined with seasonal year-end liquidations to push aluminium premiums in Europe downward in the week ended Tuesday December 4. The benchmark Rotterdam in-warehouse P1020A duty-unpaid premium dipped to $70-75 per tonne on December 4, down from $70-80 per tonne – a level it had maintained since November 23. Traders reported aggressively low premiums, mostly around $65-$70 per tonne. Participants are hesitant to carry and finance metal through December and January, where there is a costly $17-per-tonne backwardation on the LME’s December-January spread. This compares with a $12.25-per-tonne backwardation a week ago. “I think with the backwardation...

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Justin Yang

Michael Roh

Hui Li

Mia Aureus

Renato Rostás

December 05, 2018

06:00 GMT

Singapore, Shanghai, London, New York, São Paulo