Platts South Korean aluminum spot premium weekly assessment rose $3/mt week on week to $100-$105/mt plus LME cash, CIF Busan Wednesday from $97-$102/mt a week earlier.
Market participants noted that premiums in South Korea have surpassed Japan as buyers are having to compensate for having slashed term contract purchase volumes.
Strong bullish momentum in the US was pushing up global premiums and South Korean traders and consumers are having to raise their bids in order to secure tons.
The LME's contango curve also put upward pressure on premiums, as stockholders were more prone to sitting on their tons in anticipation of higher returns.
Bid, ask levels appeared to be wide in South Korea. A South Korean trader reported bidding for 1,000-2,000 mt of March units at premiums of $95-$100/mt CIF Busan for metal of Australian, Indian or any duty-free origin.
Another trader said his bid ceiling was $100/mt for shipments into the North Asia. Suppliers were generally holding out for higher.
Mainstream sellers guidance appeared to center on $105-$110/mt CIF Busan. There were mutterings that Indian ingots may be available at competitive rates, possibly as low as $90/mt CIF Busan, but this could not be confirmed.
A producer put $100-$105/mt CIF Busan as a reasonable valuation for March shipments from Australia, India and other duty free origins.
The range appeared to be validated by a notable number of regional and western traders.
Two traders felt strongly that sellers could reasonably expect to achieve $110/mt CIF Busan.
A third trader said $110/mt could easily be reached for shipments to Incheon, but that Busan was closer to $100-$105/mt.
DOMESTIC WAREHOUSE PREMIUMS $115-$125/MT
Warehouse tons in Korean warehouses appeared to center on $115-$125/mt FCA Busan, depending on terms and optionalities.
Western traders may generally be able to offer lower ex-warehouse premiums, but the terms and optionalities would typically be more restricted, including currency options.
Following a warning by warehousing firm Access World on January 27 of forged warehouse receipts in their name circulating in the metals market, participants have said they were not aware of many fraudulent cases that have been detected in South Korea.
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 $12/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 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 a LME-registered or non-LME registered warehouse, a trader said.
Platts South Korean aluminum spot assessment reflects the premium or discount to the LME cash price for P1020A ingots CIF Busan basis, for P1020 of any origin, with a typical trade volume of 200-2,000 mt for loading in the next 30 days, duty unpaid.
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 and 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.
