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Japan's spot aluminum premium falls to $86-$88/mt plus LME, CIF

Monday, Nov 13, 2017

  S&P Global Platts assessed spot Japanese aluminum premiums at $86-$88/mt plus London Metal Exchange, cash CIF Japan, on Friday, down from $85-$94.50/mt CIF Japan on a deal closing at $87/mt CIF Japan.

The $87/mt deal follows two spot deals earlier this month at $93/mt and $95/mt CIF Japan.

The $87/mt deal was between two traders, while the other deals involved a producer.

With the possibility of more spot deals as buyers remain in the market, a clearer direction could emerge following two months of premiums swinging up and down in the $80-$100/mt range.

First quarter contract premium negotiations are expected to start in two weeks.

A Japanese trader said he was seeking to buy at less than $85/mt CIF Japan, adding that current offers, from traders and producers, were in the range of $88-$100/mt CIF Japan.

The potential for a higher premium level in Q1 may have triggered active spot buying, as buyers hope sellers with financial years closing in December may accept lower premiums for December shipments, according to sources.

Japan's domestic prices have been holding stable at Yen 250-270/kg ex-warehouse ($2,202-$2,370/mt) this week, market sources said.

A Yen 250-Yen 260/kg range is for deals of around 500 mt or more, with smaller volumes attracting higher prices. Deliveries are typically for November-December.

Japanese traders said these domestic deals equate to LME cash plus an import premium of $100-$110/mt.

"With domestic deals done at high levels, it is possible for the first quarter contract premium to settle in three digits," said one Japanese trader.

Market sources have said typically the spot premium level would depend on whether the seller has the option to sell to several locations or just to Japan, and if the buyer is open to any 99.7% ingot or limited to specific origins.

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