Near-Term LME Aluminum Discount Reached Highest Level Since 2008

SEATTLE (Scrap Monster): The discount on aluminum for near-term delivery on the London Metal Exchange (LME) upon comparison with the three-month contract widened further to hit the highest level since 2008. The peak discount t levels suggest falling demand and rising supply of the metal. It must be noted that aluminum demand has been sluggish in China- the top consuming country.

At the close of the market on Monday, 15^th August, 2023, the discount for near-term aluminum against the three-month contract surged higher to $55.50 per metric tonne, which is the highest level recorded since November 2008. This compares with the premium of $40.50 at end-May this year.

As per market participants, the discount started to develop significantly since early June this year, when the Chinese Yunnan province boosted production of aluminum following the end of curbs on power consumptio. The discounts are likely to be boosted by high interest rates and demand slowdown. There exists no near-term catalyst that could trigger a reversal, they noted.

The data published by the International Aluminum Institute (IAI) indicates that higher production in China resulted in 1.8% surge in global aluminum production during H1 this year.