Strong aluminum demand in Asia lifts premiums
Strong aluminum demand in Asia lifts premiums
SINGAPORE (Reuter): Robust aluminum demand in Asian markets is
currently boosting premiums as the trade prepares for talks next
month on third quarter supply contracts, base metal traders said
yesterday.
"Demand is very good," a dealer at a Japanese trading house
said. "It's quite good in Indonesia and Malaysia. Thailand is not
so good because of its sluggish economy."
"Even with higher LME (London Metal Exchange) prices, those
who need the spot material have to pay the higher premiums," a
European trader said.
Premiums in Japan were seen at US$85-$92 a ton CIF over LME
cash prices, up more than $5.0 from the level about two weeks
ago, traders said.
The situation was mirrored in Indonesia, where premiums
touched $90-$95 a ton CIF Jakarta. In Taiwan, the premium was
quoted at $90 a ton CIF Kaohsiung and Keelung. Russian aluminum
in Hong Kong was indicated as high as $100 a ton CIF.
Traders said most of the demand was coming from the booming
car, beverage can and construction sectors.
LME aluminum inventories reached 809,825 tons yesterday, down
30,000 tons from two weeks ago.
"The LME stocks are declining quite heavily. That should
continue," one trader said.
But current LME prices are a deterrent for Asian aluminum
buyers. Three month aluminum was quoted by Far East dealers at
0330 GMT at about US$1,594/98 a ton, slightly higher than the
close in London on Thursday of $1,594.
"Some buyers are taking a wait-and-see attitude and watching
the market in London," a Japanese dealer said.
Another dealer said the level of "consumer interest depends on
the LME price. If they have the time, we advise them to hold off
a bit."
Traders said a break to lower prices may help consumer
confidence in the coming week.
Brandeis said LME aluminum had "a relatively poor close on the
chart (yesterday) with prices failing at the 30-day moving
average at $1,612. Good support seen at $1,595 with further
support expected below $1,590 from trade buying."
The rest of the base metal trade in the region was quiet, with
mostly routine business being done, dealers said.
"Demand is mostly steady all around the region, but it's
nothing special," a dealer said.
Most Far East dealers believe LME three month copper will move
up later on Friday on the back of a technical squeeze.
"The scramble to cover short positions continued as concern
grew that the technical tightness would intensify and could
approach levels last seen in January of over $300 backwardation
ahead of the tight dates still to come in late April/early May,"
Brandeis said.
Copper premiums were a touch firmer in Singapore on the back
of higher three month prices. Premiums for Grade A cathodes were
quoted at $30-$55 a ton against $20-$50 last Tuesday.
"The price went up and premiums followed suit," one said.
Singapore indications as a premium to LME cash prices
(Warrant/premiums):
April 25 April 22
Aluminum - Western (20-25 kg ingots) +65-80 +60-80
Aluminum - Indian (20-25 kg ingots) +45-60 +40-60
Aluminum - Russian (20-25 kg ingots) +45-60 +40-55
Aluminum - Indonesian (20-25 kg ingots) +60-75 +55-75
Copper - Grade A cathodes, 99.9 pct +30-55 +20-50
Zinc - 25 kg ingots/ 99.9 pct +20-30 +20-30
Lead - 25-40 kg ingots/ 99.9 pct +20-30 +20-40
Nickel - LME registered cathodes/99.8 pct +50-150 +40-150