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LME prices approach $1,800 as World manufacturing exits contraction; Backwardation intensifies (bearish premiums)

P1020 PREMIUMS ALERT.

LME prices approach $1,800 as World manufacturing exits contraction; Backwardation intensifies (bearish premiums)

Executive Summary

1. LME prices climb to a new three-week high as world manufacturing activity exits contraction territory; current price target is $1,810–$1,820 per mton.

2. LME December–January backwardation intensifies to a new record high, pressuring the Cash–3M “back” to a new sixteen-month peak (bearish spot premiums).

3. SECTION 232 ALERT. US to remove Argentina’s exemption from Section 232 tariffs on aluminum; no relevant effect anticipated on MW premiums

4. P1020 PREMIUMS ALERT. Ocean freight rates up on IMO 2020 regulations (bullish premiums)

5. ALUMINUM PRODUCTION ALERT. Slovalco smelter to curtail as much as 35 kmtpy of primary aluminum production; limited market impact as ROW’s production accelerates.

6. China’s aluminum prices test levels above important resistance threshold on upbeat manufacturing data.

More detail in full report.