South Korea’s PPS buys aluminium at close to $300/t premium

South Korean Public Procurement Service’s (PPS) latest aluminium tenders have inched close to $300 per tonne and the agency has decided to take delivery in five months instead of the usual three months. On Monday December 23, PPS bought 6,000 tonnes of aluminium and 3,000 tonnes of zinc. It will be taking delivery of these metals five months later in May.

LG International won the tender to supply 2,000 tonnes of Indian-origin aluminium ingot at a premium of $294 per tonne over LME cash price.

Dreample won the tender to sell 1,000 tonnes of Indian-origin aluminium ingot at a premium of $289 per tonne. It also won a separate tender to sell another 1,000 tonnes of western origin aluminium ingot at premium of $269 per tonne.

Glencore won the tender for 2,000 tonnes of western-origin aluminium ingot at premium of $278 per tonne over LME cash price.

“There is a lot of metal in the main warehouse so we need longer delivery time,” a senior official at PPS said.

“We will have to review our MJP expectations for next year after these latest PPS numbers,” a senior trader from Japan said. “South Korea has plenty of aluminium stock. These tender results show the buyers will have to pay even higher premium levels,” he added.

PPS tenders are an important Asian benchmark for aluminium, besides MJP and Nalco tenders.

As for the aluminium stock in South Korea, the trader believes market participants are continuing to take advantage of the wide contango in the aluminium market and expects cheap financing to continue.

PPS also bought 1,000 tonnes of zinc from Korea Zinc at a premium of $209 per tonne and 2,000 tonnes of zinc from YoungPoong Corp at premium of $205 per tonne.