The LME aluminum quotation is under scrutiny for potentially not representing the true global aluminum prices, with market variations influenced by the LME's quotes.
MetalMiner actively posts on a variety of metals and market developments. However, we prefer to discuss topics that our clients bring to us, especially those that keep buyers awake at night. One such topic that has been recurring over recent months is the anxiety surrounding the LME aluminum quotation. Specifically, there has been a lot of talk over the LME’s potential failure to reflect the true value of global aluminum prices.
The primary concern keeping buyers up at night is the supply/demand position. Specifically, the worry stems from the oversupply of Russian aluminum and the limited supply of non-Russian metal on the exchange. This situation could potentially lead to an excess of the exchange’s metal coming from a supply source that too few buyers are willing to use. This, in turn, could cause the LME price to trade at a discount to its actual value.
However, this premium is incapable of reflecting specific brands or origins. As we previously reported, the LME has periodically reviewed and decided against banning deliveries of Russian metal. A reason for this is concerns about the legal consequences, as Russian metal is not subject to sanctions. If a discount emerged, it could open the possibility for a Price Reporting Agency to launch a Non-Russian Delivery Premium.
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