TOKYO: Spot premiums for aluminum imports into Japan and South Korea rose as higher premiums in the US and Europe absorbed spot Australian supplies in Asia, market sources said Wednesday.
Platts assessed spot Japanese import premiums at $87.50-$92.50/mt plus London Metal Exchange cash CIF Japan Wednesday, up from $85-$90/mt plus LME cash CIF Japan Tuesday.
Platts South Korean import premiums rose to $90-$95/mt plus LME cash CIF Busan Wednesday, up from $80-$90/mt plus LME cash CIF Busan a week ago. Spot trade was thin in the two markets, as sellers retreated in expectation of higher premiums following an increase in premiums in the US and Europe.
Buyers said they did not have immediate spot requirements and stocks were high, and would wait for the buying spree in the US and Europe to ease. Australian producers and overseas trade sources said there was no spot inquiry from Japanese buyers but bids below $90/mt plus LME cash CIF Japan would be clearly rejected.
Spot sales to Europe have closed recently at $200/mt plus LME cash in-warehouse Rotterdam, equivalent to $100-$110/mt plus LME cash CIF Japan, factoring in freight, duty and other cost differences.
Meanwhile, a producer in the Middle East said he put East Asia spot premiums at $90-$95/mt plus LME cash CIF, adding that he has closed several deals into South Korea in the range of $90-$95/mt plus LME cash CIF Busan in the past week.
Japanese traders and consumers said their bids would be below $90/mt plus LME cash CIF Japan, the lowest being $70/mt plus LME cash CIF Japan in the light of high main port stocks of 440,000 mt.
Platts determined premiums of $87.50-$92.50/mt plus LME cash CIF Japan to be the tradeable and repeatable market level on Wednesday, up from $85-$90/mt plus LME cash CIF Japan Tuesday.
The weekly spot South Korean import premium assessment of $90-$95/mt plus LME cash CIF Busan was on the basis of deals at $90-$95/mt CIF Busan for over 1,000 mt lots comprising ingot with minimum 99.7% content, iron maximum 0.1%, and silicon maximum 0.1%.
A South Korean trader also reported a spot sale at $105-$110/mt FCA, for Australian ingot with minimum 99.7% aluminum, maximum 0.15% iron and maximum 0.1% silicon. The trader said $105-$110/mt FCA South Korea is equivalent to $97/mt CIF Busan.
A South Korean consumer pegged the tradeable spot import level to be $90/mt plus LME cash CIF Busan. Market participants expressed mixed views on how the rising premiums in the US and Europe affect Asia.
Australian supplies, originally destined for Asia, were diverted to the US and Europe. But some non-Australian suppliers appeared not as keen to chase spot deals, particularly those focused on value added products such as billet, slab and foundry alloys.
The 2016 demand outlook for value added products is weak in Asia, producers told Japanese buyers during ongoing annual contract negotiations for value added products.
The Japanese contract premium negotiations for the first quarter, which will heat up later in the month, will indicate whether the higher ex-Asia demand will push up the Asian market, or the ex-Asia uptrend will not offset weak Asian demand after all, sources said.
