Japan's spot aluminium premiums fall to $55-58/mt on high stocks

Tokyo (Platts)--21Jan2009 Spot premiums for primary Good Western grade aluminium ingots imported into Japan fell to $55-58/mt over London Metal Exchange cash Wednesday, from the previous $58-60/mt as stocks swelled, according to Platts assessments. There was almost no spot activity reported in Japan this week as trading houses and consumers struggled with rising stocks of imported aluminium ingot. There was no buyer who was willing to pay higher than $58-62/mt, the premiums for contract shipments for the current quarter, sources said. Japanese trading houses found that aluminium ingot, alloy and billet stocks at the country's three international ports had risen to 313,300-316,300 mt at the end of December, up 17% from the previous month. The figure is already equivalent to two month's consumption. Stocks may rise as consumption has fallen further this month. Rolling mills cut operating rates to roughly 60-70%, from 80% in November. The November run rate was obtained from the Japan Aluminium Association Web site. The market was pressured by stocks, according to trade, consumer and producer sources. Japanese trading houses and rolling mills were studying the possibility of putting some aluminium at LME registered warehouses in the country, as non-LME warehouses particularly at the Yokohama port are becoming full, according to some traders. "This is critical, as LME warehouses in Japan would be the last place to put aluminium in," one trader said. Storage cost as specified by the LME was 29 cents/mt per day, plus handling fees charged by the warehouses. A warehouse operator said fees at LME warehouses could be higher than fees charged by Tokyo Commodity Exchange warehouses, adding that Japanese companies were making inquiries at LME warehouses. Japan had zero stocks at Hakata, Kobe, Moji, Nagoya, Osaka and Yokohama LME warehouses as of Tuesday.