European aluminium market still evaluating impact of duty cut

European physical aluminium trade was heard patchy this week, with market sources still largely drawn on what the spot premium levels should be. The Platts European aluminium ingot premium range for Good Western duty-paid inched up $5 on the top end of the range to $135-150/mt, in-warehouse Rotterdam, plus LME cash and unpaid also gained $5 on the bottom end of its range to $55-60/mt, same basis. Russian A7E, unpaid, in-warehouse Rotterdam, was unchanged at $45-55/mt, as was A7E on a FOB St Petersburg basis, plus LME cash, on a lack of bids, offers or deals heard in the market.
    
A producer buyer said the premium range "seems very wide." He continued: "The market is still trying to evaluate the right premium for itself. Customers don't know where premiums are," adding that delays in shipments had also prompted some purchase inquiries. He noted that while there may be lower
premiums offered in the market he would not sell below $170/mt, in-warehouse Rotterdam, plus LME cash. He said he had sold at this level this week, for "reasonable tonnages up to 500 mt" for prompt delivery and on a cash basis.
    
A London trade source said the aluminium market still seemed to be confused over the impact of the duty change. "While some people think there should be no change, there are others who think there should be -- so there has not been much trading," he said, adding that the impact was still working
its way through to the system to the products market.
    
A European Union regulation cutting the import duty on unwrought aluminium to 3% from 6% was published in the Official Journal of the European Union and came in to effect on May 12.
    
Regarding the chunky 17,725 mt cancellation at Italy's Trieste warehouse location early last week -- all the registered tonnage there -- the London trade source said he believed the activity was "genuine" and due to physical demand, not physical fund activity. "There may be some people selling products
into Italy and using their duty-paid units elsewhere," he suggested, adding that there was "a lot of swapping going on."
    
A second London-based trader said with regard to the Trieste cancellations there were some "silly games being played in this market." He said as far as he knew the physical market was very quiet.
    
A consumer source said there was not much going on in the market. "Germany is heading in to holiday mode," the source said, adding however that reports out of Italy were that business there was "chugging along nicely," which might explain the recent cancellation activity there. The source reported "some tiny tonnage" purchases this week at $140/mt, in-warehouse Rotterdam, plus LME cash. "The number of $170/mt leaves me speechless. I can't imagine paying that number. If unpaid is at $60/mt in the worst case, how do you get to $170/mt with the duty," the consumer said. The source said it seemed that higher purity metal was tight, but there seemed to be enough P10/20 around. "Premiums have not really moved. The market is slower, but not anywhere near as grim as it is in the US," the consumer said.
    
A European trader said he had done "pieces here and there" and activity had slowed a little ahead of the approaching summer. He quoted Good Western unpaid at $60-65/mt and Russian at around $55-60/mt, while duty-paid was placed at $150-160/mt. He confirmed doing deals in this range. "Some people are trying to get lower numbers, but in reality premiums are firm," he said, adding that some vessels were late and there was less metal around than people thought. He said the Trieste cancellation appeared to be for shipment somewhere, but he had not received any specific