SINGAPORE Rio Tinto Alcan
Inc.s initial offer for third-quarter aluminum premiums
in Japan is above second-quarter premiums, three trading
sources told AMM sister publication Metal
The Montreal-based producer has
offered aluminum at a premium of $254 per tonne over the London
Metal Exchange cash price for delivery at main Japanese ports
for July through September, said sources who received the
The Japanese economy is showing
signs of recovery, which was the primary reason Rio Tinto gave
for the higher premium, a source said. A second trader said the
company also cited strong premiums in other parts of the
The negotiation of quarterly
premiums in Japan, seen as the benchmark for Asia, started this
week. Other major producers have yet to put forward
Japanese buyers had agreed to
second-quarter premiums of $248 to $249 per tonne after
producers attempted to get $250 to $255 per tonne in the early
stages of negotiations.
"With a weaker Japanese yen,
exports are really good from Japan," the first trader said, and
automotive industry exports are expected to increase. However,
premiums of $254 for the third quarter are "too much" and
should be negotiated down to $250 per tonne, he said.
Demand for primary metal remains
stable, according to other traders, who will be negotiating
with aluminum producers over the next few weeks.
"We did not see weak demand. On
the other hand, we did not see strong demand either," a third
trader said. "In theory, (a) weak yen is (good) for the export
industry, but at the same time, importing raw materials (gets
expensive). I havent seen imports improve yet, but
exporters expect demand to be better."
Japan meets all of its primary
aluminum needs by importing about 2 million tonnes
"Importing aluminum may be
expensive for the Japanese buyer, but since exports are
growing, even if they buy aluminum at a higher price they can
sell more quantity," the first trader said. "So it still makes
Elsewhere in Asia, premiums
remain stable in a quiet market as participants watch the
negotiations in Japan. "Overall, aluminum is quite lackluster,"
a trader in Singapore said.
There are offers of $175 to $185
per tonne for London Metal Exchange warehouses in Singapore and
Johor, Malaysia, but demand has not been overwhelming.
Metal Bulletins South Korea c.i.f. premium for
aluminum was at $220 to $230 per tonne last week.
A version of this article was first published by AMM sister
publication Metal Bulletin.