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 also widened by up to $5 per tonne some locations.
But for material with the 10% duty, the arbitrage window widened $12 per tonne in almost all locations.
“The arbitrage has widened owing mainly to a combination of a lower underlying LME price and a stronger Midwest premium assessment with some compensating variables in the form of fot [free-on-truck], ocean freights and barge rates,” a market source said.
The three-month LME aluminium price traded below $1,900 per tonne for the majority of January, hitting a low of $1,785.50 per tonne at the beginning of the month.
A persistent backwardation in LME spreads...