Japan Q1 aluminum premium talks start slowly, buyers await offers
Tokyo (Platts)--26Nov2012/430 am EST/930 GMT
Negotiations for the premiums for primary aluminum ingot imported into
Japan in the first quarter of 2013 are starting slowly as Japanese buyers
wait for firm offers from overseas suppliers, sources said Monday.
Two overseas suppliers were in Japan the week of November 19-23 to
discuss the premiums for either Q1 2013 or for the whole year.
A deal was reported done at less than $220/mt plus LME cash CIF main
port basis, for shipment in the second quarter of 2013. This deal, however,
was not accounted for in the Platts assessments which are for shipments in
January-March 2013 or before.
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Suppliers did not make firm offers for Q1 2013 last week but discussed
market trends with customers, Japanese sources said.
Japanese buyers are waiting for offers from two Australian producers
this week, they said.
The premiums in the past two quarters jumped by 20-70% on the back of
tightening supply, caused by producer output cutbacks and some market
participants delivering available supply to LME warehouses rather than to
end-users, sources said.
One Japanese end-user said he was eyeing a sharp reduction in Q1
premiums amid slowing demand.
"The fourth quarter premiums were up $50/mt from the third quarter due
to London Metal Exchange warrant premiums [premiums for aluminum stored at
LME warehouses] rising. It had nothing to do with demand. Premiums should
likewise fall sharply, as demand is slowing," he said.
Three Japanese traders, however, said unless there is a change in the
LME rules for withdrawing aluminum from LME warehouses, LME warehouse-based
financial schemes are expected to continue throughout 2013.
"I personally think the Japanese import premiums in 2013 will hold above
$200/mt," said one trader.
The low interest rate of below 1% and a wide contango spread of over
$30/mt between cash-three months LME aluminum contracts continue to attract
investors, Japanese traders added.
Meanwhile, the spot premiums for primary aluminum ingot stayed at
$220-230/mt plus LME cash CIF, unchanged since October 16, according to
One overseas seller in October had indicated possible spot sales at
$220-230/mt but has not been able to attract buyers in Japan. A second
overseas seller source said earlier this month his spot premium idea was
$220-230/mt CIF Japan as he has heard from third parties a deal closing at
--Mayumi Watanabe, email@example.com
--Edited by Martin O'Rourke, firstname.lastname@example.org