Aluminum Futures Are Bullish: Shellady

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July 28 (Bloomberg) -- TJM Institutional Services’ Scott Shellady and Bloomberg’s Ken Hoffman discuss the price of aluminum on today’s “Future In Focus” on “In The Loop.” (Source: Bloomberg)

A.c.l. itg am investments.

-- a ceo at t g.m. investments.

It looks like the market has now actually seen a deficit area aluminum has an really interesting this year.

A change from a big surplus to a destin -- to a deficit.

A lot of producers have cut supply.

On the demand side, you have the ford f1 50 that will take around 250-300,000 metric tons, which fits and about one month.

Tell us a little bit about why the cme decided to trade the futures contract and any specifics about the contract itself.

Certainly.

The contract is interesting.

When i buy aluminum and i actually want to take delivery, there are two parts of the charge.

The parts that pay for aluminum, about $.88 per pound.

To actually get that aluminum out of the warehouse and onto my truck, i have to pay a premium, a surcharge.

The premium has said, this is not fair and what they're doing is they put the $.88 together with their charge, $.16, saving yourself about four cents per pound, and they have a new contract around this.

They hope the buyers of aluminum will switch over to the contract.

If they do, traders will go where there is liquidity and the contract will be a home run.

It could be a really good time for them to come out with this contract.

What you think of the new contract and do you want to trade it and where are you placing bets on aluminum?

Yes, we are really excited about it down here.

We can make some headway.

I agree with earlier comments that this is a perfect time to get involved.

When we started trading year, it is starting to show weakness but if you are in terms of the july contract, i want to stay alongside here with a tight stop around the 2350 area.

It is a product a lot of customers have shown demand for.

Guaranteed credit risk.

All of those things are even more important today's marketplace.

Let's put the trade in layman's terms.

If you buy aluminum futures and the prices up $10 and the total contract is up to hundred $50 in 25 metric tons, ken, i want to go back to you.

We often hear the word remy moment talk about futures.

Headlines recently have been that the premium for physical delivery is at record level highs.

Explain to us what premium when it comes to alumina means.

Sure.

It has been around a long time.

It is really getting the metal you own out of the warehouse with a shipping and handling charge.

For decades, no one cared.

For aluminum, a petty to account, it never mattered.

Most of the warehouses were not making money.

In the u.s., you have one warehouse left.

They all the sudden started raising the premium legalizing -- realizing it is a huge part of the cost of aluminum.

That is why you saw the cme jump on this.

And hopefully drive the premium down for consumers.

Interesting.

A new loan of futures contract trading at what might be a pivotal point for the price of the metal as it looks like the supply is finally running out of market.

Thank you so much for joining us.

Back to you, betty.

Speaking about the markets, we're getting breaking news right now.

Charging lloyds banking group and lloyds bank with manipulation.

Manipulation in their letter -- leveraging fines.

She -- peter cook has much more.

This goes back to the libor

This text has been automatically generated. It may not be 100% accurate.

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