London Metal Exchange aluminum warehouse stocks in Asia have decreased but only marginally so far this year, despite the rise in US aluminum demand, pushing the US spot premium to the highest level since May 2015.
LME Busan stocks stood at 123,800 mt, Port Klang at 110,725 mt and Singapore at 184,725 mt on January 22.
Busan stocks were down 3.7%, Singapore up 1.2% and Port Klang down 5.9% from January 2.
The Platts US Midwest premium rose 18% to 11.25 cents/lb delivered ($247.50/mt) Tuesday from 9.5 cents/lb on January 2.
The CIF Japan spot premium rose but at a slower pace of 10% over the same period. As a result, the gap between the US and the Japanese spot premium widened to $140-$150/mt from $110-$120/mt, which would typically attract more Asian aluminum supplies, including LME stocks, to the US.
Traders said that LME stocks have decreased but only marginally so far this year as LME stocks comprise brands and shapes that are not preferred in the US. Consequently, although the US spot premium was expected to continue rising, LME stocks would hardly move.
One trader said he heard a week ago that there may be a few hundred tons of sows and T-bars, shapes preferred in the US, in one of the Asian LME warehouses, but the rest of the stocks appeared to be of smaller shapes and origins not widely accepted in the US. Another trader said that the current stock in Asia is likely to include products from countries that have political issues with the US.
A third trader estimated 30,000 mt/month of aluminum, mostly produced by Indian and Australian smelters, was transported to the US in the last few months.
A fourth trader said the volume was larger, putting it at 60,000-100,000 mt in the last two months.
In November, the US imported 11,409 mt of unwrought aluminum from Asia, mostly of Indian and Chinese origins, and 1,071 mt from Australia, according to the US Census Bureau data.
The November imports were likely to have been loaded in Asia in September-October as it takes roughly a month for a ship to travel to the US and another one-three weeks to clear customs.
The regional supply in Asia has gone up as China has increased its exports of aluminum products due to weaker domestic prices. However, the recent rise in the Asian exports to the US has likely offset this increase in supply, sources said.
China's exports of unwrought aluminum and aluminum products in December rose 12.8% year on year to 440,000 mt and was up 15.8% from November, latest preliminary data from the General Administration of Customs showed.
