LONDON (Reuters) – A sharp fall in Japanese physical premiums for fourth quarter shipments is the latest sign that aluminium is not immune from the demand weakness that is sapping the industrial metals complex.
The timing, however, is ironic. Years of chronic overproduction appeared to be coming to an end with global output actually falling so far this year and large off-market stocks finally starting to diminish.
Demand hasn’t been a problem for aluminium in the past, thanks to its growing usage in an automotive sector focused on light-weighting vehicles. That has changed over the course of this year.
Physical market premiums are confirming what a bombed-out London Metal Exchange (LME) aluminium price has been saying. Growth in aluminium usage is braking sharply and analysts are starting to downgrade already low price forecasts.
PHYSICAL SIGNALS
The first reported deal for aluminium shipments to Japan in the fourth quarter has been signed at $97 per tonne over the LME cash price, down from $108 in the third quarter.
For the rest of this column: https://uk.reuters.com/article/uk-metals-aluminium-ahome/column-sliding-japan-premium-confirms-aluminiums-demand-problem-idUKKCN1VY1HN