TOKYO: Japan’s spot aluminum import premiums were steady at $90-$100/mt plus London Metal Exchange cash CIF Japan Monday, unchanged since July 28, despite falling premiums in Europe.
Spot import trade was absent in Japan despite the strong yen, as the fourth quarter contract negotiations are expected to start this week. Japanese buyers and overseas seller sources reported no deals, offers or bids over August 20-24.
In Europe, spot premiums fell last week reacting to a tighter LME contango spread and global supply overhang and the seasonal demand slowdown. Platts’ assessment for duty-paid European premiums fell to $135-$150/mt plus LME cash in-warehouse Rotterdam last Friday from $150-$165/mt.
“The Japanese market does not react to LME spreads as fast as Europe, because financing deals are not active. Japan’s stocks [of 490,000-500,000 mt] are mostly for sales to end-users,” said one trader.
Sumitomo Corp said it forecasts $100/mt contract premiums for Q4, in its note to customers. Platts’ Q3 premium assessment was at $90-$100/mt plus LME cash CIF Japan. Market participants appear to be adopting Sumitomo’s view.
There may be a $5/mt dip if Chinese exports reduce demand for non-Chinese aluminum or a $5/mt rise if demand improves or stocks fall, but drastic movements are unlikely, they said.
Meanwhile, local spot trade picked up Monday on the back of the stronger yen, which was at Yen 121 to US dollar compared to Yen 123-124.5 last week. One consumer in the food packaging sector has awarded a buy tender Monday, following two buy tenders on August 18 and 19.
The company was heard to have bought several hundred tons for delivery spread out over several months in 2016 at around Yen 205 ($1,694/mt) ex-warehouse Nagoya, but Platts has not been able to confirm. The award result shows the Japanese market is seen staying in a contango and that there is no panic selling yet, sources said.
To compare, aluminum prompt deliveries in Japan were quoted below Yen 200/kg thanks to the strong yen and LME cash at $1,500/mt at 0800 GMT Monday, Japanese consumer and trade sources said.
