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Asian aluminum premiums hold; contract terms shorten

Keywords: Tags  Asia, premium, aluminum, MJP, Japan, Korea, China, Singapore Malaysia

SINGAPORE — Asian aluminum premiums have held steady in muted trading during the holiday season, with business being done on a short-term contract basis following last year’s premiums volatility.

"Spot Main Japanese Port (MJP) premiums were at $240 to $245 per tonne, same as long-term quarterly premium(s)," a trader in Tokyo said.

More buyers in Asia are switching to quarterly prices from fixed prices for the year, continuing a trend from last year.

"Japan has always been on a quarterly basis. ... Participants in Southeast Asia want to buy quarterly (based on the) MJP benchmark," a major producer told AMM sister publication Metal Bulletin.

"You have to be very brave to buy on a fixed basis. ... A vast number of contracts have been of a floating nature," he added.

Demand is very slow, and "more short-term and floating contracts are being done compared to 2012 to lower risk," the Tokyo trader said.

First-quarter MJP premiums settled at $240 to $245 per tonne, below the record high of $253 to $255 per tonne in the fourth quarter of 2012 but way above the 2012 first-quarter premium of $112 per tonne.

Demand has been weaker in the first quarter in Japan as companies reduce volumes.

"Auto is suffering due to the political tension between Japan and China. There have been fewer exports to China from Japan," a second producer said.

In Singapore and Johor, Malaysia, premiums have held firm at $170 to $180 per tonne, with little trading, Metal Bulletin understands.

"It’s been slow so far," a trader in Singapore said, adding that offers are being made at $170 to $180 per tonne, but "nothing has happened at those numbers (this year)."

South Korea premiums were around $230 to $235 per tonne.

No deals have been reported in China for weeks.

"Nobody is doing anything, as far as I know. Do your arbitrage and see if you can import," a trader from Beijing said.

On Tuesday, Metal Bulletin’s three-month aluminum arbitrage was at $20 (125 yuan) per tonne, while the cash arbitrage was at $36 (228 yuan) per tonne.

China’s net imports of primary aluminium dwindled to 12,640 tonnes in November 2012, down 74.2 percent month on month and 42.1 percent year on year, according to customs data.

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