Warrants for aluminum stored in the London Metal Exchange warehouses in Asia are trading at almost twice as high as in end of last year, tracking the US spot physical premiums, traders said Friday.
A Japanese trader said he has heard LME aluminum warrants in Southeast Asian warehouses offered, possibly by a bank, at around $45/mt, while another Japanese trader said he was hearing offers at $25-$30/mt.
Both traders agreed at the end of last year, they were hearing $15/mt or less. Around June last year, warrants for some origins were heard at as low as $5/mt.
Warrants are trading higher in Asia, as US demand is strong, and traders are taking LME stocks out of warehouses for sale in the US, traders said.
The Platts Midwest Transaction premium, basis delivered Midwest, has stood at a near two-year high of 10 cents/lb ($220/mt) since February 6.
Cost breakdown of bringing LME warehouse stocks to the US was $25-$45/mt for acquiring warrants, $0.5/mt for canceling the warrants, $25-$40/mt for bulk freight from Asian main port to the US, $40-$50/mt for transporting the metal from the warehouses to ports, also known as headline FOT charge, and $30-$40/mt truck freight from the US main ports to the Midwest, traders said.
