CRU Aluminum: Aluminum Prices Move Sideways Absent Buy-Signals

A year ago, the LME was $3,100 per metric ton (mt) and the Midwest Premium (MWP) was pressuring $0.39/lb. In early May 2023, the LME is resting near $2,300/mt and the MWP is settled at $0.25/lb. That marks a $0.50 /lb. reversal in underlying metal value year over year (y/y).

The US Midwest premium continues to flatten as Q2 progresses. Slack demand in Q1, which slowed both physical and trading activity underpins current market sentiment. Absent any serious metal price risk, buyers remain sidelined, awaiting clear buy signals. Adding to this posture, mill lead times, for both flat-rolled (FRP) and extruded profiles have pulled closer, dramatically.  Extrusion lead times were 20, 30 even 40 weeks, one year ago, and FRP was on strict allocation. Today, with lead times 4 to 6 weeks, and little metal price risk, buyers have no incentive to purchase ahead of real demand. Last year, fears of a price run, and further supply shortages drove exaggerated purchases.