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...