The U.S. Midwest prompt aluminum premium over London Metal Exchange cash prices held steady around 5 to 5.5 cents over the last week, the same as in mid-August, traders and analysts said.
Still, observers describe an improved market compared to early in the year.
"There's still not enough scrap, which is giving prime a little more offtake," said one trader. "Also, there have been better value-added-product orders. So the producers have a bit less prime and more is going into billet, rod, coil and other types of products. There are a little bit better volumes this quarter over last."
Jorge Vazquez, analyst with Harbor Intelligence, said the bulk of the trade appears to be around 5.25 cents, compared to a premium of roughly 4 cents back in February. He cited a pick-up in demand from the construction and auto sectors.
Meanwhile, he said, inventories held by aluminum producers appear to be the lowest ever. And, he said, most metal stored in London Metal Exchange warehouses is not readily available to the market, as it is tied to financing deals.
"We are only experiencing hand-to-mouth demand," he said. "There are unprecedented re-stocking needs in the entire supply chain. We believe that as the fourth quarter progresses, we will probably see a combination of ongoing underlying demand growth, with a compound effect of re-stocking needs."
LME cash aluminum was officially quoted at $1,792 to $1,792.50 per metric ton Wednesday, or about 81.28 to 81.31 cents per pound.
Inventories of aluminum stored in
LME warehouses fell 25 metric tons to 4,614,325 from Tuesday to Wednesday. The total is down modestly from 4,617,975 metric tons one week ago.
source:news.ino.com
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