After a sharp slide, US Midwest aluminium premium may have hit a bottom

The benchmark US Midwest aluminium premium was steady on Friday, October 28 for the first time since the beginning of September, prompting some sources to say the premium has reached a bottom

The US Midwest aluminium premium, now stable at a midpoint of 19.5 cents per lb – less than half of the all-time high midpoint of 40 cents per lb reached in April – has undergone extreme highs and lows in 2022.

Fastmarkets’ assessed the aluminium P1020A premium, ddp Midwest US at 19-20 cents per lb on Friday, unchanged from Tuesday, October 25 and steady for the first time since September 6.

“I believe we are hitting bottom,” one buyer said.

Midwest premium target ranged from 24- to 50-cent-per-lb midpoint in 2022

The Midwest aluminium premium started 2022 at a midpoint of 30 cents per lb.

In late March, market participants predicted that the premium would hit a midpoint of 50 cents per lb.

But by early June, expectations for the premium had fallen to a midpoint of around 24 cents per lb.

Following Russia’s invasion of Ukraine on February 24, supply concerns caused the Midwest premium to reach an all-time high midpoint of 40 cents per lb on April 8, where it remained until May 3.

Demand concerns subsequently took over, with fears of recession outweighing the anticipated halt in aluminium supply from Russia.

Most US aluminium market participants pay attention to the P1020A premium because it affects prices for aluminium scrap, alloys and value-added products such as extrusions.

Overseas aluminium market participants also watch the Midwest premium for the best arbitrage opportunities.

P1020 reaches a plateau, at last: sources

According to October 12 report, the US was reconsidering banning imports of Russian aluminium. Paradoxically, the Midwest premium continued to decline in the following assessment on October 14.

This week, spot demand for aluminium remained subdued in the US, especially with many market participants attending the London Metal Exchange’s annual event, LME Week, which concluded on October 28.

In the latest assessment, Fastmarkets heard that a producer continued to reduce premium offers to consumers.

Most buyer and seller sources, however, said the premium has stabilized.

“It’s held in a tug of war between weak economic conditions on one side and low inventories on the other,” a second buyer said.

“I think this is the bottom,” the buyer said, but added that “only the bravest among us are willing to buy metal right now.”

What to read next
Aluminium market participants in the US anticipate stable business supported by continued tariffs and potential interest rate cuts, while industry sources in Europe and Latin America are watchful of potential new trade restrictions.
Chinese authorities officially announced that they will be expanding the range of permitted recycled copper and aluminium imports from mid-November, but market participants Fastmarkets spoke to at a conference this week are not convinced that this will mean more material will be imported into the country in the short run.
Fastmarkets is inviting feedback on the pricing methodology for MB-AL-0004 aluminium P1020A premium, in-whs dp Rotterdam and MB-AL-0346 aluminium P1020A premium, in-whs dup Rotterdam ahead of the definitive period of the European Union’s Carbon Border Adjustment Mechanism which starts from January 2026.
Li-Cycle announced on Thursday October 31 that it had entered an agreement with Glencore to sell 100% of the premium nickel-cobalt mixed hydroxide precipitate (MHP) production at its stalled hub in Rochester, New York – a step that could support Li-Cycle’s efforts to finalize a loan with the US Department of Energy (DOE).
Unprecedented supply tightness and record low treatment and refining charges (TC/RCs) are likely to challenge copper smelters in 2025 – even more than in 2024, sources told Fastmarkets.
The publication of Fastmarkets’ MB-PB-0086 lead 99.99% ingot premium, cif India and MB-PB-0087 lead 99.97% ingot premium, cif India assessments for Tuesday November 5 were delayed due to a reporter error.