Japanese aluminum premiums fall ahead of Q4 talks as keen sellers emerge

S&P Global Platts assessed spot premiums for aluminum imports into Japan at $66-$74/mt plus LME cash CIF Japan Wednesday, down from $76-$77/mt plus LME cash CIF Tuesday, as keen sellers emerged ahead of fourth quarter premium negotiations.

An international trader has offered $75/mt plus LME cash CIF Japan for October and received counterbids at $65/mt plus LME cash CIF Japan, with no deals done due to the gap.

A Japanese trader confirmed having received the offer at $75/mt, which was for 99.7% minimum aluminum, 0.2% maximum iron and 0.1% maximum silicon guaranteed metal of origins excluding Brazil, Venezuela, Russia, India, Iran and Egypt.

Other traders and producers who do not usually participate in quarterly contract premium negotiations have started to discuss Q4 with potential buyers.

Buyers have asked for $65/mt plus LME cash CIF Japan for Q4, down 29% from $90-$93/mt for Q3, said two traders. One trader said there was also a bid at $60/mt plus LME cash CIF Japan for Q4.

After holding discussions with potential buyers, one producer said he would wait for Q4 settlements to be agreed between major global producers and Japanese buyers.

Another producer was asking for premium ideas from Japanese buyers for Q4 but had not returned with a firm offer, said a Japanese consumer.

Japan’s aluminum stocks at three main port warehouses have fallen to a near two-year low of 305,900 mt, according to trading house Marubeni.

But there were also stocks in South Korea’s Busan warehouses, exceeding their annual consumption, sources said.

Busan stocks stood at 159,300 mt at LME-approved warehouses this week and there may be larger volumes outside LME warehouses where monthly rents were cheaper, sources said.

The cost of bringing metal to Japan from South Korea is in the range of $20-$100/mt depending on shipping arrangements, sources said.

Those who are able to secure transport at $20-$25/mt take the opportunity to ship the metal to Japan, trade and Japanese consumer sources said.

Rising Libor interest rates are adding to pressure to sell, a trader said.

Major global producers have not released their offers for Q4 premiums.

Source: Platts