Center Valley, Pennsylvania 25/07/2016 - The forward curve for the CME Group's aluminium MW US Transaction Premium (AUP) contract is now quite flat, which indicates that the market does not expect much movement in premiums in the near term.
The July AUP contract settled on Friday at 7.096 cents per pound and August through December were each at 7 cents. Every month in 2017 closed at around 7.1 cents.
AUP volumes last week were light at just 600 lots or 15,000 tonnes; still, this is not surprising given that it's the middle of the summer and premiums have been stable recently. But AUP open interest rose to an all-time record of 31,677 lots or 791,925 tonnes.
"The market has accepted 7 cents - there's good support [at this level] but there's little chance they move higher [because there is too much metal around]," a producer source told FastMarkets. "But premiums shouldn't fall much further so we could see some spot buying from consumers who were waiting for a bottom."
Physical aluminium premiums in the US have come under downward pressure in recent months due to a flood of imports from Russia, the United Arab Emirates (UAE) and Canada, according to an analysis of US Geological Survey data.
Crude aluminium and alloy imports in January-April totalled 1.37 million tonnes, up 19 percent year-on-year, the USGS said.
FastMarkets' US Midwest spot aluminium premium has held at a five-year low of 6.9-7.25 cents per pound for the past several weeks.
(Editing by Mark Shaw)