In Commodity News 02/06/2015
Platts assessed spot premiums for aluminum imported into Japan at $80-$130/mt plus London Metal Exchange cash, CIF Japan on Monday, as the import market has come under greater pressure from destocking in the local market.
The spot premiums are down from $110-$130/mt plus LME cash CIF Japan over May 20-29.
Monday’s $80-$130/mt assessment was on the basis of offers for spot and July-September term cargoes at $130/mt plus LME cash CIF Japan, and the highest spot buy indication at $80/mt plus LME cash CIF Japan.
One overseas supplier has made a sales indication to a Japanese trader at $130/mt plus LME cash CIF Japan late May, for Indian-origin 99.7% ingot. Volume, loading time and other terms were not discussed as the Japanese trader did not express interest, said the buyer source.
Japanese market sources said Indian ingot has a limited track record in Japan, so it usually trades at a $10/mt discount to Australian aluminum.
But Australian ingot at $140/mt plus LME cash CIF Japan for June-July loading will not attract buyers as an Australian producer had offered a third-quarter contract premium at $130/mt plus LME cash CIF Japan last week, Japanese traders said.
The Japanese traders had bid or planned to bid at $60-$80/mt plus LME cash CIF Japan for the Q3 contacts and were seeing similar levels for spot CIF trades. The higher end of the $60-$80/mt was taken into account for the Platts spot assessment.
Japanese traders based their bids on local spot deals. Although import and local markets are separate with different players, the traders said record-high local port stocks of over 500,000 mt had been weighing down on both markets.
Platts reported several local spot deals at less than Yen 240/kg delivered ($2,000/mt) closing last week.
The most recent deal was for 1,000 mt closing late last week at around Yen 230/kg ($1,854/mt) for July delivery, according to sources familiar with the deal. The premium is estimated to be $60-$70/mt on the basis of LME settlement price of $1,719/mt, sources said.
“There is no sign of domestic prices bottoming out, and whoever comes into buy will ask for lower and lower prices, telling us, look at these stocks,” said one Japanese trader.
Spot Japanese import premiums at $80-$130/mt also suggested a wide perception gap between Japanese buyers and overseas sellers.
While Japanese buyers pursue two-digit premiums, overseas producers are resisting as Asia, outside Japan, seems to have stabilized.
Malaysian Press Metal’s 320,000 mt/year Samalaju smelter suspended output on May 17 following a fire. This may generate spot demand, depending on how long the smelter remains shut, sources said.
Press Metal expects to restart production in June.
Indian producer Vedanta has issued a sell tender for 2,000 mt/month of standard P1020 ingot for July-September loading on a CIF basis, to close on June 9 or 10.
Some market participants are monitoring the tender result for a market direction.
“Will producers be able to decrease sales to Japan and sell to Southeast Asia whose demand seems to be recovering at a faster speed than Japan?” said a second Japanese trader.
Recent spot sales were heard done into Vietnam were at $130-$140/mt plus LME cash CIF Ho Chi Minh, for several hundred tons of Australian-origin ingot, possibly June loading, said two Japanese traders.
There were deals heard in Thailand at $150-$200/mt plus LME cash CIF Bangkok for 100-1,000 mt lots of possibly primary ingot with minimum 99.7% aluminum, maximum 0.02% of vanadium and titanium combined, maximum 0.1% iron, maximum 0.2% silicon, maximum 0.03% zinc and maximum 0.04% gallium. “Metal with low vanadium and titanium content commands $30/mt premium over the regular P1020,” said one Japanese trader.
