Currencies crisis swallows Asian metal demand<\/p>\n
SINGAPORE (Reuter): Southeast Asia's currency crisis has
\nhammered base metal demand, although there was light buying in
\nIndonesia following Jakarta's market-friendly reforms aimed at
\nrestoring economic confidence, traders said yesterday.<\/p>\n
\"It's very bad. Business shrank,\" a senior dealer for a
\nJapanese metal trading house told Reuters. \"Malaysia, Thailand
\nand Indonesia wanted to buy, but they could not do so.\"<\/p>\n
Traders said consumption by Indonesia, which used to buy
\naround 10,000 tons each of zinc and aluminum every month, dived
\nto around 1,000-2,000 tons a month for both metals.<\/p>\n
\"A lot of the people in this region are buying cheaper-grade
\nmaterial like off-grade zinc instead of the special high grade.
\nIt should remain generally weak because of the currency
\nsituation. It's a poor year,\" one trader said.<\/p>\n
Waves of speculative attacks sent Southeast Asian currencies
\nplumbing fresh lows over the past few weeks and triggered a heavy
\nsell-off in stock markets in Malaysia, Indonesia, Thailand and
\nthe Philippines.<\/p>\n
An aluminum producer said the situation in Indonesia appeared
\nto have stabilized, especially after Jakarta announced measures
\nto boost investor confidence in its economy.<\/p>\n
\"Indonesia is picking up slightly. They are suffering, but
\nbusiness must go on,\" he said, adding fourth quarter aluminum
\nsupply contracts for consumers there should be quoted around
\nUS$85-$90 a ton CIF Jakarta.<\/p>\n
Thailand appears to be worst hit.<\/p>\n
\"I don't know how many people are willing to sell to Thailand
\nbecause they are not sure how they are going to get paid. Most of
\nthe buying there has been postponed,\" a dealer said.<\/p>\n
\"Thailand is simply absent from the market. There is no
\ndemand. They are the ones who have suffered the most,\" one trader
\nadded.<\/p>\n
But one analyst said consumers around the region will
\neventually be left with no choice but to absorb the higher cost
\nof metal imports.<\/p>\n
\"These countries have quite a lot of infrastructure to do. The
\nimport cost will be quite expensive, but they really need the raw
\nmaterials,\" the analyst said.<\/p>\n
Traders said copper, aluminum and zinc were badly needed in
\nSoutheast Asia to build highways, power plants, telecommunication
\nfacilities and houses.<\/p>\n
Base metal business will remain flat over the short-term until
\nthe currency woes bedeviling the region eases somewhat.<\/p>\n
\"We have to wait and see how the whole currency turns out,\" a
\ndealer said.<\/p>\n
More immediately, negotiations for fourth quarter aluminum
\ncontracts in Japan were concluded recently with premiums set at
\nlower levels, dealers said.<\/p>\n
\"It was set at $75-$76 (a ton CIF),\" one trader said. \"The
\ntalks are over in Japan.\"<\/p>\n
The new premiums are down sharply from a base of $87-$90 in
\nthe third quarter due to weak demand. The Japanese premiums are
\nnormally used as a benchmark for supply contracts in other
\ncountries in Asia.<\/p>\n
Fourth quarter premiums in South Korea were pegged at around
\n$80 a ton CIF Pusan, down from $90-$95 in the third quarter,
\nwhile those in Taiwan will probably be set at around $80-$85 a
\nton CIF Kaoshiung and Keelung against the previous quarter's $90-
\n$95.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/currencies-crisis-swallows-asian-metal-demand-1447893297",
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