Aluminum Pricing 101
/Sometimes aluminum prices aren’t aluminum prices. Sounds crazy, right? But it’s true.
The price on the LME screen isn’t the price you pay. Published prices and premiums only tell part of the story. There are many significant basis risk factors that are hard or impossible to hedge against. In fact, the published prices you are buying against may not be tied at all to any financial hedging instrument. These are open secrets people don’t know - but they need to know the tricks to mitigate risk.
Do you want to better understand what drives aluminum pricing? Pricing mechanics are not always straightforward, but managing your aluminum price exposure starts with understanding how aluminum is priced in the first place. If the questions below ring a bell, Gary Borner’s “Aluminum 101” is for you!
Why is my price up 20% when the LME aluminum price is only up 5%?
How did tariffs affect my aluminum price? What happens if they go away?
If the Midwest premium falls, what does that mean for my aluminum price?
LME, UST, MWP, HG, AH, ETC - Help, I’m lost in the acronym soup!
Gary Borner spent 8 years on the London Metal Exchange Aluminum Committee and in this brief presentation he outlines the mechanics of aluminum pricing. If you would like a more in-depth explanation, and specific recommendations on how you can better manage your commodity exposure, Gary may also be available for 1 on 1 sessions.
