China aluminum: Wide price gap keeps imports at bay

<p>A wide spread between import and domestic aluminum prices continued to keep Chinese buying interest at bay in August, despite premiums falling over the month, market participants said.<br /><br />S&amp;P Global Platts assessed the aluminum spot premium delivered to Japan at $66-$74/mt plus LME cash Wednesday, down from $76-$77/mt a month ago.<br /><br />Rio Tinto Japan this week offered Japanese buyers a fourth quarter contract premium of $82/mt plus London Metal Exchange cash CIF Japan, down 10% from the Q3 premium of $90-$93/mt, Japanese buyers said Tuesday.<br /><br />Chinese aluminum stocks have increased on the back of slowed demand, as numerous downstream producers had shut down or cut back recently due to government environmental protection inspections. The Q3 summer season was also a seasonal slow period for downstream producers, sources said.<br /><br />Heavy rains recently have also made it difficult to transport liquid aluminum, and numerous smelters have switched back to producing ingots as a result, sources added.<br /><br />Domestic aluminum stocks were estimated at slightly above 300,000 mt on Wednesday, up from 260,000-300,000 mt a month ago. The levels are expected to rise further to around 400,000-500,000 mt in Q4, sources said.<br /><br />On Wednesday, the front-month aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,430/mt ($1,858), down from Yuan 12,535/mt last week, but up from Yuan 12,400/mt last month.<br /><br />The Platts all-in price for aluminum P1020 imports to China stood at Yuan 13,343/mt Wednesday, which equated to a spread of Yuan 913 when compared with the current Shanghai Futures Exchange price of Yuan 12,430/mt.</p>