Apr 08 2022
S&P Global Commodity Insights assessed the second-quarter premium for imported primary aluminum at $172/mt plus London Metal Exchange cash, CIF main Japanese ports, on April 8, down 2.8% from $177/mt in the previous quarter, as demand for the metal in Japan remained weak
S&P Global's Platts specifications are for all quarterly settlements on a CIF main Japanese port basis, negotiated before the quarter between two unaffiliated counterparties, for P1020/P1020A 99.7% primary aluminum ingot, with payment in cash against documents, for volumes of 500 mt/month or more under annual frame contracts.
The Q2 assessment was on the basis of at least 11 concluded settlements at $172/mt plus LME cash CIF Japan for seaborne P1020/P1020A ingot for loading over April to June, for a volume of at least 500 mt/month. The 11 concluded deals were reported between March 31 to April 6, and the total volume of these trades amounted to a minimum of 19,000 mt/month.
There were also 13 settlements reported done in the range of $135-$167/mt between March 10 to April 7. These trades were not deemed repeatable by the close of negotiations, whereby most of the deals reported in April were concluded at $172/mt. The total volume of the 13 trades reported came to a minimum of 9,500 mt/month.
In addition, two deals reported closing at $150/mt March 28, as part of the annual frame contract, for less than 500 mt/month were excluded from the Q2 assessment as neither of the deals fulfilled S&P Global's minimum volume requirement of 500 mt/month.
The lower Q2 premium versus Q1 was largely attributed to weaker Japanese aluminum demand amid a persistent shortage of semiconductor chips, which has prompted automotive producers in the country to announce production cuts in the upcoming quarter. Also, supply of aluminum in Asia has remained high as China started exporting aluminum coils in late March, market sources said.
Downstream demand for aluminum in other parts of Asia has been similarly low.
In addition, the Chinese import arbitrage window has remained closed since October 2021, contributing to the lack of support of premiums in the Asian aluminum market.
Platts assessed CIF Japan spot premium for 99.7% P1020/P1020A aluminum ingot at $100-$110/mt plus London Metal Exchange cash, CIF Japan, on April 8, up $1/mt on the day.