The weekly Davis Index P1020 premium rose by 1.1¢/lb on Monday to 27¢/lb above the LME Aluminium cash price, following increased freight prices to the Midwest.
Trucking costs have tripled over the past year because of which, even a slight increase in supply may not be able to correct the high premium prices. Still, the premium may now attract imports since it can cover the 10pc Section 232 tariffs on aluminum.
Last week, around 300 manufacturers wrote to the Biden government to remove the tariff since it is making procuring metal very difficult for both small- and large-scale operations. Domestic prime production is unable to keep pace with demand making imports a necessity for most suppliers of the material to maintain a healthy supply chain. Moreover, some buyers have stepped away from the market due to high premiums preferring instead to wait until the market cools down.
The 6063 billet premium inched up to 25.2¢/lb above the P1020 premium. The acute shortage of spot billet leaves room for higher premiums as buyers are willing to pay up for any material that becomes available. That said, almost no trades have been heard. Some offers were heard at around 27¢/lb while bids are around 25¢/lb.
The official LME Aluminium cash price closed Monday at $2,565/mt ($1.163/lb), up by $120/mt from May 3.