The weekly Davis Index P1020 premium increased by 1.5¢/lb to 30¢/lb above LME Cash on Monday following a tight supply of the metal. Spot deals were heard anywhere between 29.5¢/lb to 31.75¢/lb delivered US Midwest.
A lack of imports from countries such as Canada and Russia has further weakened domestic supply chains, due to the decreasing production inland. US smelters continue to decline in primary metal production. Elevated freight costs continue to factor into the material being delivered to the Midwest, especially from the other side of the country.
While external factors such as the Chinese state reserves auction and the Russian export tax should have had a big role in the premiums, market participants believe that these have had little effect on the regional surcharge.
The 6063 billet premium leaped 4.1¢/lb over the past week to 26.8¢/lb above P1020 as most of the surfaced material was quickly taken off the market by buyers who were waiting for spot deals. Despite reports of much better extrusion scrap and secondary billet production, primary billet deals remain stagnant, but in fact almost risen in nickels on a monthly basis since Spring. Deals were heard in high 26’s or above 27¢/lb in some cases.
The official LME Aluminium cash price settled Monday at $2,449/mt, down $90.50/mt from Jul 5.