Total canceled LME aluminum warrants in Singaporean warehouses Thursday rose 5,700 mt from Wednesday to 29,925 mt, following reports from trade sources that a greater proportion of LME-delivered stock was being received in local warehouses.
The rise in cancellations, which now make up 11.24% of warranted Singaporean metal, was in line with trader observations that Singaporean warrants had become the least valuable of all delivery locations. "This area has a lot of weakness and a steep cost of bringing warranted stock to an FOB number," a trader said.
"If you wait to take stock on the exchange, much less comes out of Vlissingen now and a trader can get Singapore at LME flat so this can then be sold at a small premium."
Quotes for Singapore warrants were heard at as low as $5/mt in the past week, with traders pointing to a lack of immediate end users, high costs to bring metal from in-warehouse to FOB and a smaller Vlissingen warehouse queue as reasons for Singapore's relative weakness.
A European warehouse operator said he had heard several traders "bigging up" the Vlissingen warrant at the expense of Singapore. As of Thursday, Vlissingen cancellations have fallen for 37 consecutive days while total warrants have declined steadily since early May.
A second trader said further Singaporean cancellations would signal "bearish sentiment in Singapore."
A third trader said the only reason to keep metal on warrant would be collateralized financing or not being able to sell metal at competitive rates to end consumers.
South East Asian premiums were last heard at around $80-$85/mt plus LME cash CIF Malaysia, while Platts assessments for Korea and Japan currently stand at $75-$80/mt and $90-$93/mt, respectively.
