Japan saw the first significant aluminium delivery deal for the second quarter of this year settle at US$82 per metric ton above London Metal Exchange cash price earlier this week according to industry sources who spoke to metals media.
Per S&P Global, the anonymous source said the deal was for over 500 metric tons per month of Good Western metal. A bid of US$75 per metric ton was still on the table with other aluminium suppliers, per the source.
S&P Global notes that the deal is 22 percent lower than last year’s second-quarter assessment of US$105 per metric ton as well as being off of the current quarter’s assessment of US$83 per metric ton.
Experts say that Japan’s second-quarter aluminium premiums tend to be higher than first-quarter premiums due to a rise in demand spurred on by the start of a new fiscal year. However, thanks to the global COVID-19 pandemic, aluminium demand has suffered alongside the worldwide market in general.
Before landing on US$82 per metric ton, offers ranged from a low of US$70 per metric ton earlier this week to a high of US$95 per metric ton in mid-February. This month has seen firm offers from three producers of between US$98 per metric ton and US$105 per metric ton.
“Producers are sort of on the sidelines now. Japanese consumers wish to buy and so traders start to step in and make markets,” an anonymous international trader was quoted as saying in S&P Global’s reportage of the event. He went on to say that a deal for about two thousand metric tons of aluminium with a trio of sellers at premiums of between US$81 and US$83 per metric ton.
Japanese premiums are prices for raw aluminium above the LME cash settlement average of the shipment month, cost, insurance, and freight paid by seller (CIF) to Japan.