Platts assessed spot Japanese aluminum import premiums at $110-$115/mt plus London Metal Exchange cash, CIF Japan, Monday, as several Japanese traders sought deliveries for April, after the financial year closes in March. The spot premiums were assessed up from $105-$110/mt plus LME cash CIF Japan Friday.
A producer has reported sales to several Japanese traders at $110/mt plus LME cash CIF Japan, early March loading, one or more transaction for over 1,000 mt.
A second producer reported spot sales to one Japanese company, who buys from him on a term basis, at $110/mt plus LME cash CIF Japan, for over 250 mt, transaction closed in the last two weeks.
Typical shipping time from Australia, the Middle East, Russia and North America are two to six weeks.
Bids and offers, and softer indications, were in a wider range, of $105-$130/mt plus LME cash CIF Japan, sources said.
One Japanese trader said he was a seller at $120-$130/mt plus LME cash CIF Japan, as he was expecting April-June contract premiums to rise from $110/mt plus LME cash CIF Japan for the current quarter, attributing the possible premium rise to falling stocks.
Meanwhile, he was a buyer at $105-$110/mt plus LME cash CIF Japan, he added.
"There are Japanese buyers eyeing $105/mt plus LME cash CIF Japan, but there are no sellers. On the other hand, there are some sellers being very bullish, aiming for $120-$130/mt plus LME cash CIF Japan. I don't think numbers above $115/mt are tradeable," said one producer.
Some market participants said they were hoping to pick up spot cargoes at low premiums as they were expecting companies with excess stocks may come into the market to sell with the spread between LME cash and three-months in $2/mt backwardation Monday.
But such sellers were difficult to find, said trade and consumer sources, as market participants want to hold onto their stocks.
Japanese main port stocks were 393,600 mt at the end of December, down from 401,000 mt at the end of November, according to trading house Marubeni.
The stocks volume is higher than the typical 250,000 mt. But more than 20% of the 393,600 mt appear to be locked in financing deals taking advantage of the LME spreads, sources said.
"Traders have been asking each other if they had excess stocks to sell, have been turned down by every one, and they figured out, may be the available stocks may be much less than 390,000-400,000 mt, there may not be enough supplies," said one Japanese consumer.
Some see available stocks at 300,000 mt, others 200,000 mt, but the consensus is, it is better to have more stocks for supply security, other sources said.
Domestic spot trades, ranging from 5-100 mt, were done at Yen 195-196/kg ex-main port warehouses Monday and last week, sources said, adding that they have not seen any moves by other market participants to sell below these levels.
Two sources said Yen 195-196/kg ex-warehouse would be at import cost levels consisting of Q1 contract premium of $110/mt plus LME cash CIF Japan.
Domestic spot prices holding stable, despite the LME backwardation spread, could cause the Q2 Japanese contract import premiums to rise, sources added.
Q2 contract premium negotiations between Japanese buyers and overseas producers are expected to start in late February.
