The US Aluminum P1020 premium slipped by 0.2¢/lb to 34.5¢/lb delivered above the official LME Aluminium cash price on Monday as the market outlook weakened amid a slight backwardation.
Some sellers were willing to push inventory at lower premiums, fearing a continued drop in interest from buyers this week. In the meantime, the SHFE continues to run up, outpacing the LME by $500/mt or more amid curtailed capacities all over China. Most market participants are optimistic about the long-term outlook but expect the premium to correct further from its all-time highs. Closer to Spring 2022, inventory levels are expected to be much robust, leaving little room for the premium to surge any further.
The 6063 billet premium settled flat from last week at 22.7¢/lb above P1020 as the market remained slow following weakness in construction activity due to the heat and ongoing labor shortages. Market supply seems to have improved, with a few more players getting involved in the production of this type of material. Some expect the premium to correct lower by a cent by January 2022, due to the same reason.