Aluminium premiums in Europe have hit record highs according to Metal Bulletin of ~$400/t this week. Premiums elsewhere have been steady.
We have seen the Aluminium contango steepen in the last few weeks as the price has fallen, with cash-3m spread back at the 2.5% range we saw for most of the last 9-12 months. This has made financing deals all the more attractive.
Some warehouses appear to be taking advantage of this, with Vlissingen accumulating metal since it was announced that LME load-out rules would not take effect thanks to a high court ruling. This has likely supported the rise in European premiums.
Warehouses in Detroit, however, don't appear to be taking advantage of this though, with no new metal entering this affected location for quite sometime, with there now a significant cumulative outflow from 1 July 2013.
And while its hard to discern on the chart opposite, it also appears that deliveries have speed up, with load-outs currently in excess of the 3,000tpd as mandated by the LME for a warehouse holding such a large amount of metal.
Nickel prices have been wild in the last week, with speculative activity causing massive swings in the price. Indeed, the huge rally on news that Vale's VNC disruption a week was ridiculous given the frequency of outages there.
Its also clear that the current market balance is not particularly tight, with LME inventories yet to show a meaningful decline. These inventories have become more concentrated in Johor and Rotterdam though.
Its also interesting that while inventories haven't really fallen, cancelled warrants have actually come down a little. Perhaps there has been some re-warranting of metal as holders wait to see just how high prices can go.
This high level of concentration of LME stock shouldn't be too much of a barrier for it to clear when holders wish to move it. As we saw in copper, there wasn't really a bottleneck once participants decided to move metal.
Give the curve for nickel hasn't really changed that much as prices have rallied, perhaps that is a better way to play the longer term implications of the loss of Indonesian nickel ore from the market.
Asian
copper stocks are now incredibly low, even when including SHFE inventory. Metal is flowing from New Orleans fairly freely, even though it is an "affected" warehouse.
Copper prices have rallied strongly in the last two weeks, shrugging off the negative macro news and focussing on near term tightness for cathode. As
I wrote about here, this should see the backwardation in copper widen, which it has done over the last two weeks.
