Reuters reported that Base metals premiums rose slightly in Asia this week on general expectations of a pick up in demand and worries about supply, especially of aluminium later this year.
Although aluminium stocks stand at a record above 4.6 million tonnes at least one Japanese buyer has agreed to pay a premium of USD 115 per tonne for some of the primary aluminium ingots it will buy in the Q4 the highest premium in 14 years and 50% up on the Q3. At the same time Japanese port stocks have fallen to their lowest since records began in 1995, the same year that premiums last rose above USD 100.
Spot Western origin ingot was offered at premiums of USD 120 per tonne to USD 130 per tonne over London Metal Exchange cash aluminium prices for delivery to South Korea and well over USD 100 to China.
A trading source at an international bank said that "Japanese shipments are recovering quickly. The auto sector is strengthening and consumers are beginning to restock a little, so from a demand perspective things are picking up."
He said that "I think they are scared. Rusal delivered nothing in Q3 and although they are selling for Q4 consumers want to secure metal units because they are concerned that supply will tighten and they won't get the additional units they need."
South Korea's state buying organ has also reentered the market looking for 6,000 tonnes of metal and traders said that the country may buy more than 10,000 tonnes in the H2.
A dealer in Singapore said that "It's expensive stuff at the moment. We have been selling from USD 155 to USD 195 to various Asia destinations. Given the tightness, I expect a lot of calls from Japanese customers phoning up for metal. Even in China where output is surging the private sector is having trouble getting domestic metal as state projects are sucking up so much material."
The head of a physical trading desk said that "The buying is sporadic but every so often someone really needs a few units of copper. The owners of the metal know this and they see tighter markets in the future so they are in no rush to sell."
Dealers said that lead was offered at USD 180 in Singapore but with very few takers. Instead buyers preferred to wait and take material from Europe which could be had around USD 120 CIF Asia and even cheaper from China.
(Sourced from Reuters)
