Spot aluminum buying picked up during Asian trading hours Wednesday as buyers sought to stock up ahead of the Lunar New Year holidays starting next week, and also due to the London Metal Exchange price fall, sources said.
Several South Korean buyers were seeking 750-2,000 mt sizes for prompt February release in Busan and Incehon area, following several quiet days, traders said.
In Japan, which does not celebrate Lunar New Year, consumers seeking 100-300 mt cargoes for February emerged, due to the lower LME prices, traders said.
A 2,000 mt deal was reported closing at $108/mt FCA Busan/Incheon, for Good Western origin metal that is duty-free in South Korea, which normalizes to $95/mt CIF Busan, according to one party in the deal.
Another trade for around 1,000 mt was heard discussed around $5/mt higher in South Korea, but did not finalize Wednesday.
The London Metal Exchange official prices fell Tuesday to $2,196/mt after holding above $2,220/mt last week. Traders attributed the lower US stock prices to the LME fall.
In contrast, interest for March cargoes was limited, in domestic as well as in the seaborne CIF market, Japanese and South Korean sources said.
The LME February/March spread was $12.75/mt in backwardation as of LME closing evaluation Tuesday, widening from $9/mt earlier in the week.
Market participants also want to see how position adjustment will impact the spread after Wednesday, when LME options for the prompt month contracts expire, said one trader.
But sources in Japan and South Korea said moves to sell stocks were barely heard.
One Korean trader said Korean companies rarely keep stocks worth two-months requirement, but some keep stocks to under a month's requirement.
"Stocks are already so low, everyone has trimmed down. We suffer stock evaluation loss automatically from the spread, that's the impact," said a Japanese consumer.
One Japanese consumer in the automotive sector was heard awarding a 7,000 mt buy tender at $109/mt plus LME cash, ex-warehouse, delivery over April 2018-March 2019.
The $15-$20/mt domestic handling charges were excluded from the $109/mt premium, said one source familiar with the tender result.
"This is not high or low...it would be difficult to say if the LME spreads had anything to do with the tender result," one trader said.
While buyers stay away from March cargoes due to the backwardation spread, sellers are not keen to sell on the back of US premium rise, sources said.
The S&P Global Platts US Midwest premium was 13 cents/lb ($286/mt) delivered Tuesday, up from 12.75 cents/lb.
The Platts CIF Japan spot premium was assessed at $95-$109.50/mt plus LME cash, CIF Japan, on Wednesday, unchanged from Tuesday in the absence of offers, bids and deals.
Sellers have said they were shipping their supplies to the US rather than selling in Japan, as US premiums were higher.
