Winter Park, Florida 08/09/2016 - The forward curve of the CME Group's aluminium MW US Transaction Premium (AUP) contract moved into a wider contango on Wednesday after participants downgraded their expectations for September and October.
The September AUP contract yesterday settled at an all-time low of 5.993 cents per pound, down 0.3 cents, while October was at 6.25 cents was off 0.2 cents. November and December were unchanged at 6.45 cents.
Physical aluminium premiums are expected to remain soft in September following a disappointing summer for demand. The market is also weighed down by high imports and large producer and warehouse inventories.
The Aluminum Association's index of net new orders of aluminium mill products for July decreased 9.9 percent from the previous month. Orders for flat roll products were down 8.3 percent while orders for extruded products declined 13.6 percent and orders for redraw rod dropped 19.4 percent. Compared to July 2015, orders were down 2.5 percent.
FastMarkets’ US Midwest spot premium continues to hold at a seven-year low of 5.75-6.25 cents per pound, although there are antidotal reports of metal being liquidated for below 5.5 cents.
But the futures market does predict a modest uptick in premiums next year. The AUP contracts for January through March 2017 last traded at 6.85 cents, while the April through December 2017 contracts are at 7.0 cents.