TOKYO: An increasing number of Japanese companies involved in third-quarter term premium negotiations for aluminum imports into Japan have settled their contracts at $90-$100/mt plus London Metal Exchange cash, CIF Japan, while the others continue with the talks, sources said Monday.
The premium levels for Q3 have slid from Q2’s $380/mt plus LME cash, CIF Japan.
The Q3 settlements reported to date represent a total volume of around 10,000 mt/month.
A Japanese buyer, who was still negotiating, said he was bidding at $90/mt plus LME cash CIF Japan while the seller’s offer was at $100/mt plus LME cash CIF Japan.
Some companies have agreed to set the Q3 premiums on the basis of published indices, as they have not been able to narrow the gap between buyers and sellers’ ideas, sources said.
The quarterly premium negotiations are typically for over 50,000 mt/month of primary aluminum, involving around 10 producers and 15-20 Japanese buyers.
Out of the 10 producers, three of the major ones were negotiating the Q3 premiums with the buyers. Other producers will set the premiums on the basis of published indices, sources said.
Japan’s spot import premiums stayed at $95-$105/mt plus LME cash CIF Japan Monday, unchanged since June 30, due to absence of deals, offers or bids reported.
Three sellers contacted said they did not offer spot material to Japan, while five Japanese buyers said they were not seeking offers as they were focused on the Q3 negotiations.
“I am not expecting Japanese buyers to seek additional cargoes after having settled Q3 lower,” said one seller, who declined to give market indications.
One Japanese trader said although he was not seeking to import on a spot basis, he put $90/mt plus LME cash CIF Japan as tradeable, as there were less aggressive offers in the local market.
This indication was not taken into account and Platts spot assessment remained at $95-$105/mt plus LME cash CIF Japan.
Sellers have said that $90/mt would not be done as spot levels in markets outside Japan were mostly above $100/mt plus LME cash CIF. There was no noticeable change in the Asian premiums Monday.
Separately, in the domestic spot market, a Japanese consumer in the packaging sector has awarded a buy tender on Monday for 300 mt or more for September delivery at around Yen 219/kg ($1,788/mt) ex-Nagoya warehouse, according to several tender participants.
Two participants said Yen 219/kg is equivalent to LME three-months of $1,695/mt and an import premium of $90-95/mt.
The consumer does not comment on its tender results and Platts has not been able to confirm. The consumer also sought ingot for September 2016 and September 2017 deliveries, sources said.
