From Reuters:
* Platts aluminium premium rises to record high
* Premiums in Europe, Asia, Mexico, Brazil could follow suit
* Market tight due to Ormet closure, financing deals
By Susan Thomas
LONDON, Jan 7 (Reuters) - Aluminium premiums, or costs to get metal out of storage, have soared to all-time highs in the United States with Europe and Asia close behind as smelters shut and spare metal is snatched up by traders for collateral in financing deals.
The rise in premiums highlights the London Metal Exchange's (LME) limited ability to cool a market where low interest rates continue to whet appetites for locking up aluminium as a form of investment.
The LME, the world's largest metals marketplace, announced big changes to its metals storage system in November after years of complaints about wait times of more than a year and large premiums to withdraw metal from the warehouses it monitors.
It outlined plans to slash waiting times to a maximum of 50 days, among other measures, which analysts and manufacturers had hoped would lead to lower premiums especially given that the aluminium market is oversupplied.
But the benchmark Platts U.S. Midwest aluminium premium jumped by three U.S. cents per pound to 15 U.S. cents per pound of metal over the LME cash price late last week, the pricing agency said.
"The fact that we are still trading at 15 cents today suggests that this was not a fluke and that we will likely stay at elevated levels for some time across all geographies," INTL FCStone analyst Ed Meir said.
U.S. producer Ormet Corp said last October it would close its 270,000 tonne per year aluminium smelter in Hannibal, Ohio, casualty of historically low prices and high power costs.
Low prices and high energy costs have pushed Western producers to slash capacity, with smelter closures gathering pace in recent months.
"We're hearing that metal is quite tight, we're hearing that possibly the closure of Ormet has something to do with it," he added.
Dutch smelter Aluminium Delfzijl, which produces more than 110,000 tonnes of new aluminium a year, said it had filed for bankruptcy on Dec. 30.
LOCKED UP
Harbor Intelligence research institute believes that North American producers are virtually sold out of metal for January and anticipates record-high premiums for Europe, the Asian region, Mexico and Brazil over the next few weeks....MORE
