Downward trend in European aluminium premiums slows; inquiries pick up

Primary aluminium premiums in Rotterdam stabilized on Friday, November 18 after months of steep declines

Participants told Fastmarkets that buying interest had picked up in the latter half of the week for both spot and first-quarter business.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $230-260 per tonne on Friday, unchanged from November 15, with multiple transactions for large tonnages reported within the range.

The premium has been on a downward trend since May when it was trading at a fresh all-time high of $600-630 per tonne.

It has fallen by 59% since the start of June 2022, after significant declines over the summer months.

“After weeks and weeks of negativity and premiums dropping, it does feel like we are slowing down. Buyers are interested in picking up more tonnages,” one trader said.

“We have seen some consumers return to the market picking up some spot tonnages after continuous delays. It brings some positivity,” a producer said.

Although there remains a plentiful supply of units available on the spot market, participants noted there had been a significant uptick in buying interest.

“I’m not saying that the market is bullish, but it is more positive than it was a few weeks ago,” a second trader said.

The market was closely watching the duty-differential, with duty-paid and duty-unpaid units in Europe not trading at the standard 3% duty differential.

Fastmarkets assessed the aluminium P1020A premium, in-whs dup Rotterdam at $190-200 per tonne on Friday, unchanged from the previous day.

The unpaid premium also found some stability with large tonnages transacting at $200 per tonne for both spot and first-quarter business.

The midpoints show just a $45-per-tonne differential between the two premiums. But if the 3% duty was in play, the duty-paid Rotterdam mid-point premium would be close to $270 per tonne.

Participants remained mixed about future directions, with some noting that premiums were hitting a floor now that consumers were beginning to release first-quarter tenders.

But others said the premiums could remain under pressure from falling freight rates and the overall availability of units still being high.

“There are still a lot of units around and uncertainty about the long-term demand. The clarity over how much consumers will commit to is not there,” a third trader said.

The slower pace of decreases was also being witnessed on the European aluminium billet market, with one billet trader telling Fastmarkets that the room left for further decline is relatively limited.

Some consumers had started booking first-quarter tonnages amid a less negative demand picture, while others were considering where the floor could be for the premiums, with Fastmarkets assessing the aluminium 6063 extrusion billet premium, ddp Italy (Brescia region) at $800-850 per tonne on Friday, unchanged for the past three weeks.

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