Traded volumes on the CME's Midwest US aluminum premium contract in January exceeded average monthly US physical consumption for the first time, as the volume traded on the CME's financial contract reached an all-time monthly high.
The CME's monthly report showed that 16,829 lots (420,725 mt) of the Midwest premium contract (AUP), which settles off the corresponding Platts aluminum premium, traded in January. Volumes were up 131% on the year after 7,276 lots were traded via the exchange in January 2016, and 582% higher than the 2,469 lots that traded in December 2016.
According to the United States Geological Survey, apparent average monthly aluminum consumption in 2015, the most recent published year, stood at 314,417 mt after excluding consumption from old scrap recovery.
Based on this consumption rate, the AUP's traded volume in January accounted for 134% of the corresponding physical consumed tonnage for the month.
The majority of the trade was conducted via the CME's Clearport system via block trades, with under 5% of AUP trades done through the Globex screen trade.
Term structure liquidity also reflected this, with a minority (33%) of executed trades booked for a single prompt month, with all other trades booked for more extended periods of time. Comparatively, 13% of trades were done over a quarterly horizon, 17% representing annual contracts, and another 17% accounting for half-year contracts.
As of the end of January 2017, open interest on the AUP contract stood at 35,145 lots, up 4.8% on the month and 36.2% on the year. Open interest also rose on the CME's corresponding Japanese aluminum premium contract (MJP), which was up 23.8% on the month and 348% on the year to 7,272 lots.
After the MJP contract saw tepid trade in December 2016, with only 760 lots traded, volumes in January were up 236% at 2,554 lots.
