Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

US primary aluminum premiums marginally declined this week, as excess capacity and Canadian supply put downward pressure on prices.

The Davis Index premium for P1020a delivered US Midwest decreased Monday to 13.8¢/lb under the three-month LME aluminum contract. The weighted average for P1020a premium has moved lower since 2020 began when it was closer to 15¢/lb.

The 6063 billet del US premium remained flat at 7¢/lb under the same LME Aluminum contract.

Some market participants said the P1020a premium could further decline as North America can supply the vast majority of the aluminum needed in today’s US market. Lower premiums prevent imports from other countries from entering the market, isolating North American primary aluminum suppliers.

Excess melting capacity and brokers are both keeping the US 6063 billet premium low. Brokers are trying to bring suppliers value by increasingly offering scrap directly to consumers with melting capacity, who, in turn, convert the material into various grades, including 6063 and 6061. Then they offer billet back on to the market.

The three-month official LME price for aluminum dropped to $0.7695/lb on Feb 3, from $0.8001/lb a week prior.

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