GLOBAL ALUMINIUM WRAP: European premiums slide on LME backwardation; global aluminium markets bearish

A widening backwardation in London Metal Exchange aluminium forward price spreads has led to physical premiums declining in Europe while stirring bearish sentiment elsewhere around the world.

Backwardation spurs decline in Rotterdam premiums. Scrap availability and LME spreads keeps US premium at its lowest since 2018. Brazil domestic premium hits two-year low amid lackluster demand. Premiums in Japan stable, with participants saying floor has potentially been reached. Backwardation restarts Rotterdam aluminium premiums’ decline The emergence of a backwardation on the benchmark aluminium LME cash/three-month spread added further downward pressure to premiums in Europe over the past week. Fastmarkets assessed the aluminium P1020A premium, in-whs dup Rotterdam at $85-95 per tonne Tuesday November 5, widening downward by $5 from $90-95 per tonne a week earlier, with the nearby backwardation cited as a primary reason for the decline. The spread flipped from a contango to a backwardation on Monday, before widening to around $6.25-per-tonne backwardation on Tuesday. Meanwhile, the December/January spread widened to a $16.25-per-tonne backwardation. “The premium is moving in line with the backwardation,” one trader in Europe said. Market participants expect further...

Published

Justin Yang

Karen Ng

Renato Rostás

Michael Roh

November 06, 2019

03:25 GMT

London, Shanghai, New York