European P1020 duty paid premiums rally, up 13% since the beginning of March

Tight availability of primary aluminium in Europe continues to push premiums higher, with Fastmarkets’ duty paid Rotterdam premium hitting a fresh all-time high

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam, at $540-575 per tonne on Friday March 11, up by 8.25% $500-530 per tonne on Tuesday.

“The market is crazy, but then again what market isn’t crazy right now? It feels hard to find bearish arguments at the moment,” a trader said.

The premium is 13% higher than where it was at the beginning of March, when it was trading at $475-505 per tonne. It is also 31% higher than the start of 2022.

“What I see is that the sharp increase [in premiums] is a liquidity squeeze right now. It’s clear that there are only limited stocks in the European market and if a consumer says to me they won’t take Russian-origin material it only reduces the pool of available stocks even further,” a second trader said.

“There’s just very few people able to offer significant tonnages and that’s where the issue lies,” the second trader added.

There was a burst of liquidity reported in the second half of this week, with nearly all deals reported above Fastmarkets’ previous range.

Multiple deals were reported for small tonnages between $550-590 per tonne, while some larger tonnages concluded below $550 per tonne.

“The market is a bit petrified at the moment. Some are in standby mode after the LME volatility this week and others are looking to cover their stocks,” a third trader added.

The London Metal Exchange three-month aluminium price hit a high of $4,073 per tonne and a low of $3,300 per tonne this week.

Participants told Fastmarkets there were a wide range of premiums in the market depending on brand and tonnages.

The European aluminium market has been on an upward trend for the last few months due to concerns about availability after high energy prices caused some producers to curtail production earlier this year.

But the concerns about tight supply have increased further following continuing developments related to Russia’s invasion of Ukraine – with Russia being a big producer of aluminium.

“It just feels like a perfect storm right now, the market was tight of material already and now there are concerns about the Russia situation. Consumers are panicking but as a trader there is a genuine concern as to where you will get your aluminium from in a few months’ time,” a fourth trader said.

Duty-unpaid premiums in Rotterdam also remain high. Fastmarkets assessed the aluminium P1020A premium, in-whs dup Rotterdam, at $410-430 per tonne on Friday, widening upward by $10 per tonne from $410-420 per tonne a day earlier.

The premium is 35% higher than it was at the start of 2022.

“[Duty paid and unpaid] markets are very strong in the current environment. One of the problems is that business is really light and only good western brands will attract the top premiums. With the nearby curve easing I see premiums staying strong for the short term,” a fifth trader said.

Imogen Dudman in London contributed to this article.

To keep up with aluminium price trends throughout 2022, visit our base metals page.

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