Aluminium perhaps stronger than LME price suggests? I like Al...

Aluminium perhaps stronger than LME price suggests? I like Al for the longer term, substitution for both copper and steel will only accelerate IMO. The weaker AUD should also help this one.


https://customers.reuters.com/community/newsletters/metals/IM_May_9_2012.pdf

US aluminum premiums soar to record above 10 cts/lb
By Chris Kelly
NEW YORK, May 8 (Reuters) - Benchmark U.S. Midwest spot
aluminum premiums rose above 10 cents a lb for the first time
as a persistently strong spread between cash and forward
prices on the London Metal Exchange continued to tie up the
metal in the warehouses.
The record-setting premium was also attributed to a pick-up in
demand following a sharp drop in the price of aluminum on the
London Metal Exchange (LME) in April, market participants
said, expecting this one-two punch to provide further upside in
the price.
"We are in uncharted territory at a record high. I have no idea
how far it can go ... no one does. That's part of the concern I
would have if I were a consumer. What's keeping it from going
to 11 or 15 or 20 cents? Nothing," a trader said.
The Midwest premium, the benchmark used for physical trading
of aluminum in North America, rose to a record range between
9.75 cents and above 10 cents per lb, with some traders quoting
as high as 11 cents for prompt delivery.

"Bids are 9.75, offers are over 10 if you can find it," said one
physical dealer. "The contango is in place and people are holding
metal. The people that need to buy that metal are going to
have to pay a price that the holders find acceptable for a return
on their investment."
Cash aluminum traded on Tuesday at a $40 per tonne discount
or contango against the benchmark three-month contract , versus
the $22.50 discount seen at the start of the year. Threemonth
prices on the LME were at $2,063.00/$2,063.50 per
tonne in Tuesday's official session, down $3 per tonne on Friday.
The LME was shut for May Day bank holiday on Monday.
"The banks have no incentive to sell because they are making
so much. The contango is around $40 cash to three's ... they
can make money all day long. Why sell it?" the physical dealer
said. Buyers also stepped up their aluminum purchases after
prices slipped last week to their cheapest in more than four
months. Benchmark LME aluminum futures fell to $2,050 per
tonne, a low dating back to early January.
"It further stimulated demand," a second trader said. "We are
doing very healthy volumes at between 10 and 11 cents, and
we've been trading at that level for the last couple of weeks."
On top of the improved demand, supplies remained constrained
as tonnages continue to be locked up in the warehouses under
pre-arranged financing deals, participants said.
"Producers have already committed their production tonnages ...
to the banks who have already committed for the year, and paid
huge incentives," the first trader said.
"They're locked in already."
Incentives are paid by warehouses to traders to store the metal
in their facilities. While the warehouses earn money on the rent,
investors are willing to leave it in storage because forward aluminum
prices are higher than cash.
"In North America, all of the free-flowing material is coming out
of Detroit, and most of that is just going from warehouse to
warehouse. The new warehouse owner is going to hold on to it
and hold the market at ransom, so to speak," the trader said.
More than 1.4 million tonnes or abut a third of total LME aluminum
stocks are stored in Detroit, with significant volumes waiting
to be delivered out. The wait time to get material out of Detroit
is up to ten months, market participants said.