Japan's second quarter aluminum premium negotiations were progressing as a handful of sellers and buyers have indicated they were revising their target levels, market sources said Wednesday.
Global producers Rusal, Rio Tinto and South32 have offered at $135/mt plus LME cash CIF Japan for Q2 contract premiums, up 42% from $95/mt plus LME cash CIF for Q1.
Japanese buyers initially said they were eyeing $110-$120/mt CIF.
However one Japanese buyer has since told producers $120-$125/mt plus LME cash CIF Japan could be considered, several Japanese buyers said. That buyer could not reached for comment.
One producer has also suggested revising his $135/mt CIF offer, said a Japanese trader. None of the producers could be reached for comment.
Producers told Japanese buyers last week they were suggesting a 42% hike in Q2 premiums from Q1 as strong US demand was impacting Asia, and metal supplies in Asia were moving to the US.
Platts US Transaction premiums have remained at a multi-month high of 10 cents/lb ($220/mt) delivered Midwest since February 13.
This equates to $120-$160/mt CIF Asia, factoring in Asia-US bulk freight at $30-$50/mt and inland US freight at $30-$50/mt, sources said earlier.
"But premiums in Asia are capped at $110/mt CIF or slightly above, not going higher, because there are canceled LME ingot warrants without final buyers," said one Japanese trader.
Aluminum warrants at South Korean LME warehouses fell to 468,425 mt on March 13 from 534,950 mt on February 28, according to LME data. The warrants were canceled for planned sales to the US, market sources said.
But it seems not all 96,525 mt canceled warrant supplies were shipped to the US, the sources said.
T-bars and sows, widely used among US consumers, are moving to the US from Asia but some ingot supplies could not be sold to the US. "There is some Good Western and Indian ingot available in Asia," the Japanese trader said.
An international trader has indicated possible Q2 sell interest at $120/mt plus LME cash CIF Japan, but has not made firm offers with shipping, volume and other terms specified, Japanese buyers said.
The trader declined comment.
