The weekly Davis Index P1020 premium inched up by 0.4¢/lb on Monday to 27.4¢/lb above the LME Aluminium cash price as buyers began stepping out of the market to wait for prices to cool off.
Unlike the steady rally it has been on for a while, the aluminum premium is expected to remain at this level for a while. That said, the premium is now at an all-time high, surpassing 2015 price points as well.
The biggest driving factor continues to be freight charges since transportation costs to the Midwest have surged over the past year. Still, many expect imported metal to start flowing in soon with the US and EU starting to negotiate to end the tariff war.
Meanwhile, the 6063 billet premium has started moving lower, slipping by 0.2¢/lb to 25¢/lb above P1020. The market remains subdued as no spot material is being sold. Still, when supply emerges, participants are expecting this premium to reach close to or below 24¢/lb. Some offers are being heard at around 27-28¢/lb though no deals have been confirmed at those levels.
The official LME Aluminium cash price settled Monday at $2,455/mt (1.113/lb), down by $110/mt from May 10.