Increases in Al premiums more attractive than LME price rises–Alcoa's Ayers
November 7, 2012
By:  Andrea Hotter

An increase in aluminium premiums is potentially slightly more attractive than an equivalent rise in LME prices, but both are very welcome, a senior Alcoa executive said.

Chris Ayers, head of global primary products at the US producer, said a $100 rise in either premiums or LME prices were both top line movements to the firm.

“There are potentially some cost components involved in a $100 rise in LME prices, which could make that less attractive than an outright $100 rise in premiums, but we like both rises (in premiums or LME),” he said.

“We’d be happy to see both those factors go that way,” he added.

Aluminium companies have been criticised for selling metal to warehouses or third parties which eventually gets tied up in financing deals.

High premiums have been created partly as a result of queues to access metal in certain locations.

But Alcoa noted that the financing deals, and not producers, are to blame for the queues, with material stored in warehouses generally not owned by consumers but largely by banks and brokers keen to tap into a lucrative business.