Japan re-exports aluminium to China - traders

HONG KONG/TOKYO, March 16 (Reuters) - Japan, Asia's top net importer of primary aluminium, is re-exporting the metal to China, trimming stocks that stand at a 10-year high, traders said on Monday. China, the world's top producer and consumer of aluminium, is aggressively importing spot primary aluminium ingots as arbitrage has opened after the State Reserves Bureau and power grids sucked nearly one million tonnes of aluminium from the domestic market since December, supporting Chinese prices. [ID:nHKG108709] Traders estimated China's imports of primary aluminium would surge to around 200,000 tonnes in March, more than 1.5 times the country's imports in 2008. Fabricators in Taiwan were also increasing buying due to low stocks of the metal. "March's import could reach 200,000 tonnes," a manager at a fabricating plant in Guangdong province said. He said aluminium supply was tight in China. Demand for aluminium products such as profiles had been better than expected this month, although it was weaker than a year before. "We are taking aluminium (to China)," a trader in Japan said, adding the firm had started re-exporting aluminium this month. "It's not just Japan, everybody's shipping cargoes to China because that's where all the activity is," the trader said. Weak demand from Japanese car makers to soft drinks manufacturers has driven up stocks of imported aluminium. STOCKS Aluminium stocks at three major Japanese ports remained pegged at a 10-year high in February, up 3.1 percent from the previous month at 374,600 tonnes, an official at Marubeni Corp <8002.T> said on Friday. [ID:nT79453] Japan, which usually sets the benchmark for term premiums for primary aluminium ingots in Asia, has settled term premiums for April-June at a three-year low of $57-$58 a tonne, as a deepening recession slashes demand. [ID:nT370260] But Chinese buyers had paid premiums of $110 per tonne over cash London Metal Exchange prices for spot ingots from Japan for delivery to Shanghai, traders said. Premiums were being offered at $110-$120 for prompt delivery for ingots from LME warehouses in Singapore and South Korea, and the premiums were at $70-$80 for the May delivery. "We are willing to pay premiums less than $120 a tonne for importing 5,000-10,000 tonnes for the delivery in a week," a manager at a fabricator in Shandong province said. The cost of imports would be less than 11,600 yuan per tonne, about 8 percent lower than domestic prices on Monday. Fabricators in Taiwan were also increasing imports of spot aluminium as their aluminium stocks were drying up, trade sources said. "Many fabricators have been using stocks carried from the fourth quarter and did not book shipments for the first quarter," a purchaser for a large fabricating plant in Taiwan said. "Their stocks are about drying up and they are buying more metal, though demand remains soft," he said. That plant had agreed to pay premiums of $50-$60 for primary aluminium for delivery in the second quarter, he said. Offers now were over $60. "The premium rise is all about China," he said.