LME aluminum prices were slightly lower on Wednesday, and approaching their support levels as trading volumes were thin with many dealers absent from their desk for holidays. The metal was recently down $10 at $1709 a ton and spent the session trading in the range of $1707-$1733. The recent price quote was close to the commodity’s support level of $1680. Resistance is at $1762.

While the path has been volatile, since hitting a trough in early fall, aluminum prices have trended higher and are poised to close the year with a healthy advance. Aluminum started the year off just above $1450 a ton. Pushing prices higher was the increase in demand mostly from China’s steel sector and a tightening supply chain. China closed a large amount of aluminum production in 2015, and that impacted the markets in 2016.

The aluminum supply is more balanced and this has become evident from rising supply premiums. While premiums in the US and Europe have seen a modest rise, Japan shocked the markets this week in announcing a drastic increase in premiums for shipments in the first quarter of 2017.

According to Reuters, Japan set aluminum premium for shipments for the first quarter of 2017 at $95 per ton, a 27% increase over the previous quarter. There were hopes that premiums would drop, but a power outage at Alcoa’s Portland aluminum smelter impacted supplies. Meanwhile, according to Metal Bulletin spot premiums in the US have edged higher due to tighter availability of materials. While deals have thinned with fewer buyers active this week, those who are buying are paying a premium to secure supplies.