Platts assessed South Korea's primary aluminum spot premiums at $90-$95/mt plus LME cash, CIF Busan, Wednesday, for seaborne duty unpaid P1020 ingots with a maximum iron content of 0.14%, loading in the next 30 days.
The assessment fell $7.50/mt in the last week, and $17.50/mt in the last month, dragged down by western traders and banks seeking to destock. Anticipation of lower LME aluminum prices and weak spreads fueled the sell-off, sources said.
The market was active amid a wider than usual range of offers seen in the last couple of days. But there were few confirmed trades, except for a reported sale for about 300 mt done in the domestic South Korean market comprising warehouse units.
These may have been applicable primarily to P1020 with iron content of higher than 0.14%, or P1020, that doesn't enjoy duty-free status in South Korea such as units from the Middle East. Notably, the offers at $80-$90/mt didn't extend directly to consumers, but to traders exclusively, sources said.
The majority of sellers in the open market were eying $100-$110/mt CIF Busan levels, but there were few takers, smelter and trader sources said.
There was no shortage of warehouse stocks, and coupled with anticipation of potential downside to LME aluminum prices, buyers remained in the sidelines.
Producers, consumers and traders gave varied estimates of warehouse stock levels in South Korea, ranging from 500,000-800,000 mt. The general consensus was there was ample tons.
South Korea typically imports about 1.2 million mt/year, so the estimated warehouse stocks may be enough to cover about six months of consumption.
A producer put the mainstream seaborne market clearing rate at $90-$95/mt CIF Busan.
A consumer put the mainstream seaborne market clearing rate a shade higher at $90-$100/mt CIF Busan, but did not place a bid. A South Korean trader reported sale of about 300 mt of Indian Nalco units at $115/mt plus LME cash, FCA Busan for Fe 0.2% max.
Platts surveyed market participants earlier on how they would convert FCA Busan values to CIF, and a number indicated that CIF values would typically be about $10/mt below FCA.
Others have cited price differentials ranging from $5-$15/mt or none at all.
The conversion differences appear to stem from varying credit terms, trucking cost arrangements, discharge rates at the ports, terminal handling charges, bulk and containerized freight rates, and in certain cases currency upcharges as well.
The conversion differences may also be related to whether the metal is stored in an LME-registered or non-LME registered warehouse, a trader said.
Three other producers put the mainstream seaborne open market clearing rate at $90-$100/mt CIF Busan, $100-$105/mt and $105/mt.
South Korea's Public Procurement Service is slated to award on May 24 two P1020 buy tenders for shipments into Incheon by August 24. One calls for 1,000 mt of "western high-grade primary aluminum ingot of LME registered brands minimum 99.7%, excluding shipments from China, India, Russia, Egypt." The other calls for 1,000 mt of "non-western origin" metal.
India's Nalco has yet to award a sell tender that closed on May 17, for 4,500 mt of aluminum ingots for shipment in three 1,500-mt monthly lots between June and August, CIF Singapore basis.
Platts South Korean aluminum spot assessment reflects the premium or discount to the LME cash price for P1020A ingots CIF Busan basis, duty-unpaid, for P1020 of any origin, with a typical trade volume of 200 mt to 2,000 mt, loading in the next 30 days.
The specifications are P1020A ingots to meet minimum LME specification, 99.7% Al min, max 0.1% Si, 0.2% Fe, 0.03% zinc, 0.04% gallium, 0.03% vanadium.
The assessment is normalized to reflect metal with a maximum iron content of 0.14%, reflecting dominant trading patterns in South Korea.
