Prices for aluminium in Japan have jumped by over one fourth over last quarter’s asking price, but buyers have shown little interest in those prices due to weak demand. Such is the situation as relayed by sources involved in the negotiations to the news service Reuters earlier this week.
According to a trio of sources, aluminium smelters are asking for premiums of between US$98 and US$105 per metric ton over the asking price for primary aluminium at the London Metal Exchange for shipments in the second quarter. The asking price is up to 27 percent above the sales price for delivery in the current quarter, which buyers and sellers agreed upon late last year to be US$83 per metric ton.
“One smelter has offered $105 a tonne while another producer has proposed $98 late last week,” an anonymous source at a Japanese aluminium buying firm told Reuters on Wednesday.
“But given faltering demand in the wake of the coronavirus outbreak and spread, those are not acceptable levels,” he continued. The anonymous source said his firm would be comfortable with a second-quarter premium of US$75 per metric ton.
An anonymous source working for an aluminium smelter told Reuters that the rise in asking prices is the result of strong premiums from aluminium smelters in the Republic of Korea (South Korea) and a recovering market in Europe.
“But the negotiations may take longer than usual as it is not clear how much impact the disease would have on the global economy and supply chains,” the anonymous buyer continued.
Negotiations for the second quarter’s premiums began toward the end of last month and are projected to continue for at least part of this month. Though the global aluminium demand was already struggling before the arrival in earnest of the coronavirus, the virus has done nothing but sink demand further.