Friday May 8, 2015, 2:47pm PDT
International Business Times reported that the aluminum price is falling back to a level of normalcy after warehouses owned by financial institutions inflated the price aluminum used for beer cans and other goods.
As quoted in the market news:
"According to manufacturers, practices at warehouses owned by Goldman Sachs and other financial institutions inflated the price of aluminum used in beer cans and thousands of other goods, costing consumers as much as $3 billion a year, as one MillerCoors executive estimated.
Now, drinkers can belch a sigh of relief. Aluminum markups are falling as quickly as they once rose.
When prices were still climbing in 2013, searing investigations into the aluminum trade by the Huffington Post and the New York Times led to lawsuits, regulatory inquiries and a lengthy Senate report. The lenders had helped create a system in which forklifts shuffled aluminum back and forth between warehouses, driving up prices.
By the end of 2014, Goldman and JPMorgan Chase & Co. had exited the warehouse business, as the London Metal Exchange (LME), which sets benchmark aluminum prices, pursued reforms.
With new rules in effect since February and banks out of the business, aluminum surcharges have plummeted. The Midwest premium — a central component of aluminum pricing that reflects the cost of storage and shipping — has fallen 58 percent from its February peak, says Morningstar metals analyst Andrew Lane.
The overall price manufacturers pay for aluminum has dipped to roughly $2,085 per metric ton from $2,327 at the start of the year.