Platts assessed the South Korean primary aluminum spot premium at $90-$100/mt plus LME cash, CIF Busan, on Wednesday, for duty unpaid P1020 ingots with a maximum iron content of 0.14%.
The assessment ticked up $2.50/mt on week, buoyed by weak smelting margins and partly by recent premium gains in Europe and the US. Low LME aluminum prices and weak global smelting margins may lessen the likelihood of premiums sliding much in the immediate term, producer and trader sources said.
Two weeks ago, Rusal estimated that more than 50% of global aluminum smelters outside China were making losses.
On top of this, Chinese market participants have said nearly all local smelters were unable to break even.
Warehouse stocks continued to be high in South Korea, estimated at around 700,000 mt, held by traders and investment banks.
Sources said low US interest rates may also incentivize stockholders to hold onto their stocks, even if consumer demand continues to be relatively thin.
Six consumer, producer and trader sources put the market clearing range at $90-$100/mt plus LME cash, CIF Busan.
A number of trades were reported to have transacted in the last two weeks at $90-$95/mt, and participants generally agreed that a mean valuation of $95/mt would now be reflective of the current market.
Platts South Korean aluminum spot assessment reflects the premium or discount to the LME cash price for P1020A ingots CIF Busan basis, duty-unpaid, for P1020 of any origin, with a typical trade volume of 200 mt to 2,000 mt loading in the next 30 days.
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, 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.
