Japan's second-quarter contract premiums for aluminum imports into Japan have so far settled at $115-$117/mt plus London Metal Exchange cash CIF Japan, up from Q1's $110/mt plus LME cash CIF Japan, sources said Wednesday.
The total volume of the confirmed Q2 deals were for over 5,000 mt/month.
The negotiations are continuing to narrow the buyer-seller gap of $2, with buyers generally seeking $115/mt while two producers ask for $117/mt, sources said. The negotiations are for P1020/P1020A primary aluminum ingot for imports into Japan for the April-June quarter.
The Q2 ingot market premium for value added products such as billet, slab and foundry alloy, were settled at $117-$118/mt, sources added.
Value-added products are processed from ingot by adding silicon, magnesium and other metals, and are sized according to buyer specifications.
Platts does not take into account value added products for the ingot premium assessment.
The Q2 negotiations started a month ago. Producers were initially seeking $125-$130/mt plus LME cash CIF Japan, while buyers bid $110/mt plus LME cash CIF Japan.
Producers cited falling Japanese port stocks, production cutbacks in the US, and stable demand worldwide for the rise in premiums, while buyers said the market remained oversupplied and there had been no change in market conditions in the last three months.
During the negotiation, spot offers as low as $100/mt plus LME cash CIF Japan emerged, from some market participants seeking to reduce inventories.
One producer said he was not affected by the aggressive sale. Japanese traders, however, said although they have agreed to $115-$117/mt premiums they have cut down purchase volumes.
"They will go into spot market to fulfill the rest of their requirement," a Japanese trader said.
Platts assessed spot import premiums at $100-$115/mt plus LME cash CIF Japan Wednesday, up from $100-$114/mt Tuesday.
A producer and a Japanese consumer reported hearing a spot deal closing at $115/mt plus LME cash CIF Japan between one Japanese trader and a second producer, for possibly less than 1,000 mt.
The wide range reflected a two-tier divided market, sources said.
There are consumers and traders willing to accept $115/mt plus LME cash CIF Japan for spot, as they are able to pass on purchase costs to end-users.
There are those who seek the most competitive spot offers as well, as they plan to participate in domestic buy tenders.
