Japan’s aluminum premiums hold at $240-250/mt to LME in thin trade

Japan’s spot aluminum import premiums held at $240-250/mt plus London Metal Exchange cash, CIF Japan, Monday, in thin trade as market participants closely monitored the LME price moves.

Twelve Japanese buyers and three overseas sellers contacted Monday reported no deal, offer or bid, and Platts assessment stayed at $240-250/mt plus LME cash CIF Japan, unchanged since April 16.

The market was still lacking in spot demand, as three Japanese consumers said their consumption for the next few months was unlikely to exceed their forecast.

Three overseas sellers said there was no inquiry from Japan at all.

One South Korean trader said his focus was to sell in Southeast Asia where there were more buyers, although for small lots ranging from 25 mt to several hundred tons.

One Japanese consumer said two global producers had expressed interest to sell spot cargoes of ingot as well as value added products, as high stocks worldwide discouraged other buyers.

Spot premiums, however, were not discussed as the consumer had no intention to buy.

As high stocks stalled trade, market participants closely monitored LME price trends. Some argued that the LME price rise above $1,900/mt last week suggested that the overall downward market trend was changing, though gradually.

Aggressive spot sales at low premiums last week, may stop also because the LME contract spreads, that was in backwardation at the end of April, turned to contango last week.

One Asian trader reported Monday a 25 mt sale at $100-200/mt plus LME cash CIF Southeast Asia done last week, which some market participants said were “the bottom-level.”

Others, however, said the LME price rise was not enough to set a positive outlook.

The bottom out signs are the rebound in the spot premiums in Europe and North America, and the fall in the Japanese main port stocks, they said.

During the Japanese Golden Week holidays, the European spot premiums slumped to half of the pre-holiday levels.

Platts assessment stood at $80-100/mt plus LME cash in-warehouse Rotterdam, duty unpaid basis, on May 8, down from $160-190/mt on April 28.

The US spot premiums also fell. They stood at 11.75 cents/lb ($258.50/mt) delivered on May 8, down from 14.15 cents/lb on April 28.

Market participants contacted Monday pegged the tradeable spot premium level in a broad range of $150-300/mt plus LME cash CIF Japan.

Traders put the premiums at below $200/mt plus LME cash CIF Japan said they were on the basis of recent deals done in Asia.

“The market is still aligning to the lower deal level people hear, as there is no clear bottom out sign,” said one Japanese trader.

Meanwhile, some put the spot premiums at around $300/mt on a forecast spreading among some Japanese market participants that the third quarter contract premiums were likely to settle at around $300/mt, down from $380/mt for Q2.

The Q3 premium talks are expected to start late this month.