Metal Bulletin’s European duty-paid aluminium premium reached $400 per tonne for the first time in its history on Friday May 16, as spot business picked up in a very tight market.

“The market is fairly busy, and there’s a lot of second-half stuff to sort out,” a trader said. “There’ll be a lot to come in the next few weeks.”

The duty-paid premium rose to $380-400 per tonne on Friday, from $370-390 previously. 

Earlier in the week, a consumer reported a deal for several thousand tonnes of duty-unpaid aluminium at about $315 per tonne, but other consumers have remained as short-term buyers, not willing to sign longer-term deals at today’s high premiums. 

With producers still shifting most of their non-contracted primary metal to downstream operations, it is the traders that are supplying the spot market. Traders reported duty-paid business at $390-$400 per tonne this week, with some even selling small volumes above that range.

“It’s hand-to-mouth still. No one is willing to book very far forward,” a producer said.

It is possible that business for larger volumes could secure lower numbers, but that will only become clear when those volumes are done.

“It’s a strong market but there’s not a lot moving,” the producer said. “There have been no big volumes to see if these levels are sustainable.”

The decision by the UK Court of Appeal to give the London Metal Exchange permission to appeal the recent High Court ruling in favour of UC Rusal’s complaint has also taken the gloss off the premium increase for some market participants.

“Before the LME news I would have said premiums are going higher,” a second trader said. “If that news hadn’t come out I’d be a lot happier at $400.”

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Jethro Wookey
Twitter: @jethrowookey_mb