Recently, primary aluminium ingot premiums have soared in Europe, Japan and the USA. In this spotlight we look at the yield of regional ingot premiums over the last ten years as well as the underlying reasons for the recent sharp rise in premiums. European DUP and DP Rotterdam prompt premiums have risen sharply from an average of 55 dollars/tonne and 80 dollars/tonne in October 2009 to 75 dollars/tonne and 135 dollars/tonne in March 2010. To understand why premiums have risen in an oversupplied market, we need to return to the impact of warehousing deals as analysed in the last spotlight. In effect, consumers are competing with warehousing deals where traders have the option of locking the metal into these types of contracts or selling the metal to consumers.
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