Japan Q2 aluminium premium down about 5pct

Reuters reported that at least one deal for term premiums for primary aluminium shipments to Japan for April to June was done at USD 122 per tonne to USD 124 per tonne down about 5% from the Q1.

The buyer said that the deal was for good Western primary aluminium of South African origin adding that there seemed to be a few other deals done at similar levels. The buyer declined to say the volumes for the specific deals, but estimated a total of about 5,000 tonnes to 6,000 tonnes. Other buyers were still negotiating premiums but said they had received offers edging lower from January to March levels.

Japan's primary aluminium buyers agreed to roughly 7% to 13% hikes in premiums for the Q1 with the bulk of the premiums for January to March settled from USD 128 per tonne to 130 per tonne, a 14 year high and up from USD 115 to USD 120 for the Q4.

The buyer said that we are getting offers around the mid USD 120s and we'd like to see how much lower they could get. He added that below USD 125 might be one potential level to settle.

A trader at an international trading house, who had expected Q2 premiums of around USD 120 said that it is higher than we had expected given supply is easing.

A producer source who expected other producers would be accept around USD 124 said that supplies had reportedly offered to Japan at USD 132. He said that demand in Asia, except China, is good. We are selling spot metal above USD 130.

Japanese buyers had asked overseas traders to supply good Western aluminium at premiums of USD 115 for Q2, although Western producers had offered the premiums nearly flat from Q1's term premiums.

Traders said that in South Korea, another big buyer of aluminium in Asia, premiums for spot good Western primary aluminium traded at about USD 125 per tonne and for Indian metal at USD 110.

Japanese industry sources have said that a lack of compelling incentives for both Japanese primary aluminium buyers and producers may help to bring the premium for Q2 supplies down slightly from the Q1.

(Sourced from Reuters)