Trader quotes for Midwest aluminum premium financial swaps (AUP) on the CME rose on Friday and Monday back to above 9 cents/lb for all prompt months in 2017, following a recent dip which saw bids move to below 9 cents/lb in early March.
The rise in CME bids came after the Platts spot transaction premium sustained at the 10 cents/lb delivered Midwest despite the recent downwards pressure in financial markets which saw offers for all prompt months at below the spot premium.
As of Monday morning, a broker report showed the forward curve was flat across 2017, with bids for Q2-Q4, 2017 at 9.20 cents/lb and offers at 9.50 cents/lb. Bids and offers for Cal18 were 9.50 cents/lb and 10 cents/lb respectively.
"We are hearing the physical is well supported and there might be an uptick this week, which was due to a turnaround as consumers waited for the sell-off to lift," a broker said.
But the broker added that market perception was that the forward curve was still trading at a discount to the spot market.
Despite the Platts Midwest premium remaining unchanged for over a month, physical market participants have indicated a growing variability in physical deals with some discounting being offset by deals done at close to 11 cents/lb delivered Midwest including net-30 payment terms.
On Friday, 20 lots/month of AUP swaps for H2 2017 traded at 9.20 cents/lb, after the same strip of contracts had traded at between 9-9.25 cents/lb on Thursday.
But this represented a 0.45 cents/lb rise from March 7 when H2, 2017 traded at 8.75 cents/lb.
"There are a lot more buyers in the market right now with premiums in Japan moving up," a broker said. As of Monday, the Platts Japan spot assessment was $115-$125/mt CIF Major Japanese Ports, up 23% from the end of February.
Swap quotes for the Japanese contract on the CME (MJP) were also reported lower than spot premiums, with bids and offers over H2, 2017 at $111/mt and $115/mt respectively on Monday. This was up from bids at $108/mt and offers at $111/mt the previous week.
