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