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Regional premiums in nonferrous metals markets

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  • Christopher L. Gilbert

Abstract

Peculiarities of the LME contract structure give the impression that exchange spot prices measure transaction prices paid by consumers and received by producers. This impression can be misleading. Transaction prices also include a regional premium that can account for a substantial component of the full price. In well‐supplied markets, premiums measure the cost of intermediating exchange warehouses and consumers. In periods of tight demand they reflect the urgency of consumer requirements. I use a Markov‐switching model to analyze the regional and temporal variation in aluminum and zinc premiums.

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  • Christopher L. Gilbert, 2021. "Regional premiums in nonferrous metals markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 41(11), pages 1693-1714, November.
    • Handle: RePEc:wly:jfutmk:v:41:y:2021:i:11:p:1693-1714
    DOI: 10.1002/fut.22245
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    References listed on IDEAS

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    Cited by:

    1. Gong, Xu & Xu, Jun & Liu, Tangyong & Zhou, Zicheng, 2022. "Dynamic volatility connectedness between industrial metal markets," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    2. Christopher L. Gilbert, 2024. "Is there a copper super-cycle?," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 37(2), pages 359-380, June.
    3. Galán-Gutiérrez, Juan Antonio & Labeaga, José M. & Martín-García, Rodrigo, 2023. "Cointegration between high base metals prices and backwardation: Getting ready for the metals super-cycle," Resources Policy, Elsevier, vol. 81(C).
    4. Christopher L. Gilbert, 2024. "Cocoa: Origin Differentials and the Living Income Differential," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(4), pages 777-802, August.
    5. Gilbert, Christopher L., 2022. "Warehouse load-out queues and aluminum prices," Journal of Commodity Markets, Elsevier, vol. 28(C).

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