08 JUNE 2012Platts
Japan aluminum scrap suppliers refuse to cut prices despite lower LME
Edited by : AL CIRCLE
2 min read
Japanese suppliers of scrap aluminum have refused to cut prices for June shipments citing high primary aluminum import premiums, although scrap prices are typically pegged to London Metal Exchange prices, sources said Wednesday.
A secondary aluminum smelter official and two local traders said they have asked for price reductions for aluminum window scrap that contains over 90% aluminum as LME high-grade aluminum prices had fallen by $100/mt from a month ago. The LME aluminum settlement price for June 1 was $1,937/mt.
Aluminum window and door scrap collected from dismantled houses are typically pegged to LME aluminum prices as they have higher aluminum content than other types of scrap.
But scrap suppliers have refused to reduce the price, saying as the third quarter premiums for 99.7%-grade primary aluminum ingot imported into Japan are likely to rise by $80/mt from the second quarter premiums, which will offset the fall in LME prices, said sources.
This was the first time scrap suppliers have taken into account import premiums for prices, said sources.
The smelter official said he was offered scrap at Yen 125-130 ($1.60-1.70)/kg delivered, unchanged from his previous purchase price.
"I am asking for cuts in scrap because secondary aluminum prices are falling. But I also understand it is difficult to buy primary aluminum on a spot basis as nobody has inventory," the official said.
Scrap suppliers are likely to continue offering on the basis of premium trends, until the tightness in spot primary aluminum supply eases, he added.
A trader, however, said Japanese scrap has no direct connection with primary aluminum premium.
"Supply may ease as one secondary aluminum smelter has high stocks and is not buying ... South Koreans are not buying either due to the weaker US dollar that would increase their purchase costs," said the trader.
The third quarter premiums for primary aluminum ingot imported into Japan are currently being negotiated between major Japanese traders and consumers, and overseas suppliers. Talks are expected to settle around June 15, the deadline for July shipping procedures.
Platts has so far confirmed Q3 settlements in the range of $200-210/mt plus LME cash CIF Japan, up from Q2's $115-127/mt plus LME cash CIF.
A secondary aluminum smelter official and two local traders said they have asked for price reductions for aluminum window scrap that contains over 90% aluminum as LME high-grade aluminum prices had fallen by $100/mt from a month ago. The LME aluminum settlement price for June 1 was $1,937/mt.
Aluminum window and door scrap collected from dismantled houses are typically pegged to LME aluminum prices as they have higher aluminum content than other types of scrap.
But scrap suppliers have refused to reduce the price, saying as the third quarter premiums for 99.7%-grade primary aluminum ingot imported into Japan are likely to rise by $80/mt from the second quarter premiums, which will offset the fall in LME prices, said sources.
This was the first time scrap suppliers have taken into account import premiums for prices, said sources.
The smelter official said he was offered scrap at Yen 125-130 ($1.60-1.70)/kg delivered, unchanged from his previous purchase price.
"I am asking for cuts in scrap because secondary aluminum prices are falling. But I also understand it is difficult to buy primary aluminum on a spot basis as nobody has inventory," the official said.
Scrap suppliers are likely to continue offering on the basis of premium trends, until the tightness in spot primary aluminum supply eases, he added.
A trader, however, said Japanese scrap has no direct connection with primary aluminum premium.
"Supply may ease as one secondary aluminum smelter has high stocks and is not buying ... South Koreans are not buying either due to the weaker US dollar that would increase their purchase costs," said the trader.
The third quarter premiums for primary aluminum ingot imported into Japan are currently being negotiated between major Japanese traders and consumers, and overseas suppliers. Talks are expected to settle around June 15, the deadline for July shipping procedures.
Platts has so far confirmed Q3 settlements in the range of $200-210/mt plus LME cash CIF Japan, up from Q2's $115-127/mt plus LME cash CIF.
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