Reuters
UPDATE 1-Japan Q1 aluminium premiums mostly at $112 -sources
Edited by : AL CIRCLE
2 min read
Japan's aluminium buyers have won a 5 percent cut in premiums charged by producers for the January-March quarter, down for the second consecutive quarter, as a global economic slowdown hurts demand, sources directly involved in the deals said.
Japan consumes about 2 million tonnes a year of aluminium, or 5 percent of global consumption, but high energy costs and a lack of smelters have made it Asia's biggest importer of the light metal used in car parts, tins and construction materials.
The premiums for primary aluminium shipments to Japan have mostly been set at $112 per tonne over the London Metal Exchange cash price in talks with big suppliers like BHP , Rio Tinto and Alcore, trading houses and fabricators said.
That is down from $118 in the previous quarter.
Buyers pay a premium in addition to the LME cash price to cover freight and insurance and to reflect regional supply and demand.
Some traders said the cut is smaller than expected given the deepening global economic trouble.
"It's a surprise to us. Sellers offered $105 in November (for the first quarter)," an end-user in China said, adding that the firm had expected the benchmark premium in a $100 to $105 range.
A trader at an international trading firm said the firm was bearish on 2012 premiums and the January-March premiums would be firmer than other quarters because supply from Russia would be restricted by the icy weather.
A global economic slowdown, the strong yen and flooding in Thailand -- which hurt supply chains for many Japanese manufacturers -- have made Japan's aluminium buyers cautious of the market outlook.
"We have agreed with one supplier at $112, but are still continuing talks with others aiming for a level below $110," a Japanese fabricator said.
Big Austrian suppliers last month offered a premium of $114-$115 and later lowered the offer to $112, but Japanese buyers initially insisted on a level below $110, citing weak demand.
Supply of the light metal is estimated to exceed demand by 741,000 tonnes in 2011, trading company Marubeni Corp said on Tuesday.
The company expects the surplus to narrow to 650,000 tonnes in 2012 if the euro zone economic crisis eases off early next year.
Japan consumes about 2 million tonnes a year of aluminium, or 5 percent of global consumption, but high energy costs and a lack of smelters have made it Asia's biggest importer of the light metal used in car parts, tins and construction materials.
The premiums for primary aluminium shipments to Japan have mostly been set at $112 per tonne over the London Metal Exchange cash price in talks with big suppliers like BHP , Rio Tinto and Alcore, trading houses and fabricators said.
That is down from $118 in the previous quarter.
Buyers pay a premium in addition to the LME cash price to cover freight and insurance and to reflect regional supply and demand.
Some traders said the cut is smaller than expected given the deepening global economic trouble.
"It's a surprise to us. Sellers offered $105 in November (for the first quarter)," an end-user in China said, adding that the firm had expected the benchmark premium in a $100 to $105 range.
A trader at an international trading firm said the firm was bearish on 2012 premiums and the January-March premiums would be firmer than other quarters because supply from Russia would be restricted by the icy weather.
A global economic slowdown, the strong yen and flooding in Thailand -- which hurt supply chains for many Japanese manufacturers -- have made Japan's aluminium buyers cautious of the market outlook.
"We have agreed with one supplier at $112, but are still continuing talks with others aiming for a level below $110," a Japanese fabricator said.
Big Austrian suppliers last month offered a premium of $114-$115 and later lowered the offer to $112, but Japanese buyers initially insisted on a level below $110, citing weak demand.
Supply of the light metal is estimated to exceed demand by 741,000 tonnes in 2011, trading company Marubeni Corp said on Tuesday.
The company expects the surplus to narrow to 650,000 tonnes in 2012 if the euro zone economic crisis eases off early next year.
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