Bloomberg reported that aluminum buyers in Japan, Asia largest importer won a cut in premiums charged by suppliers for the fourth straight quarter as the fee dropped to the lowest in 18 months on a slowdown in the nation export-led recovery.
Executives involved in the negotiations who declined to be identified because the talks were private said premiums for the three months ending March 31 were set at USD 112 per tonne over the London cash price in transactions agreed so far declining from USD 116 to USD 118 this quarter.
Japan is losing its main engine for growth as the yen 10% advance against the dollar this year threatens exports, which have led the nation’s recovery from its deepest postwar recession. Industrial production dropped for a fifth month in October as the effect of the government’s stimulus fades.
Mr Tomomichi Akuta an analyst at Mitsubishi UFJ Research & Consulting Co in Tokyo said “Reduced support from the government is having a negative impact on metal consumption in Japan. The market is also curbed by ample supply as exports from Russia and the Middle East increase.”
Japan shipments of rolled-aluminum products grew at the slowest pace in 11 months in October or 5.8% annually as demand from the auto industry weakened after the government ended subsidy payments for low-emission cars on September 8.
1. Car Sales
Japan Automobile Dealers Association said sles of cars, trucks and buses, excluding mini cars slumped 31% on year to 203,246 vehicles last month,. Industry wide car sales in Japan may plunge 23% in the six months to March from a year earlier.
Mr Koji Iida head of statistics at the aluminum association said the government also scaled back incentives to buyers of energy efficient electric appliances this month, curbing the metal demand from makers of televisions and air conditioners.
Premiums have been retreating after reaching USD 125 to USD 130 in the first quarter, the highest level in at least 14 years. The fee will drop to the lowest level since the third quarter of last year when premiums were set at USD 68 to USD 75.
The executives said Japanese buyers pay a premium in addition to the London Metal Exchange cash price to cover freight and insurance and to reflect regional supply and demand. Some first-quarter transactions are still being negotiated with bids at USD 110 or below.
2. Middle East Shipments
Premiums also dropped as Middle Eastern smelters increased production and boosted shipments to Asian buyers. Primary aluminum supply from the region will grow 26% annually to 4.04 million tons in 2011, extending this year 27% expansion, Marubeni Corp, Japan largest importer of the metal forecast in its report on October 25.
According to data compiled by the Japan Aluminium Association aluminum imports by Japan from the United Arab Emirates surged 177% on year to 90,580 tonnes in the nine months ended September 30 while its purchases from Bahrain quadrupled to 31,676 tonnes in the period.
Itochu Corp. acts as a sales agent in Japan for Dubai Aluminium Co. It also began importing the metal this year from Emirates Aluminium Co a joint venture between Abu Dhabi state owned investment company Mubadala and the Dubai smelter.
Japan total imports gained 49% to 1.58 million tonnes in the nine months, of which 498,412 tonnes or 31% were from Australia and 205,895 tonnes were from Russia.
(Sourced from Bloomberg)
