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June 2015 | Aluminium Weekly Market Tracker


Why have aluminium premiums plunged this year?


Aluminium premiums have been in free fall around the globe since the start of this year. European premium has now unwound all the gains of the rally during the past two years and the current level is the lowest since 2012. In line with the European premium, both Japanese and US Midwest premiums have also dropped to multi-year lows. So what has happened? In this article, MBR gives an in-depth analysis of the reasons behind the significant decline in premium in all three key regions.

Aluminium premiums have been in free fall around the globe since the start of this year. The European duty-paid in warehouse p1020 premium had dropped to $155/tonne by the end of May, down $355/tonne from the high of $510/tonne achieved at the end of last October. It has now unwound all the gains of the rally during the past two years and the current level is the lowest since 2012. In line with the European premium, both Japanese and US Midwest premiums have also dropped to multi-year lows. So what has happened? Why have premiums in all three key regions witnessed such a significant decline during the past several months? From the chart below, we can see the decline in Europe started last November. Demand was sluggish and the economic outlook was poor, which certainly set the backdrop for a softer theme to premiums, But MBR believes that the intense...

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