Two more Japanese Q2 aluminum premium deals seen at $82

Singapore — Two deals for monthly shipments over April-June between an international trader and two Japanese consumers were closed at $82/mt, plus London Metal Exchange cash settlement average of the shipment month, CIF Japan, sources told Platts Tuesday.

One deal was for 500 mt/month shipment, and another deals was for 500 mt for April shipment, and 1,000 mt/month shipment over May-June, an international trader said. The seller also confirmed the deals are not part of annual term contracts.

One major Japanese consumer later verified the purchase for the total 2,500 mt shipments in the second quarter at a fixed premium of $82/mt.

"I think it's a desperate attempt to lift the markets concluding at $82/mt. We have not agreed to anything yet," said a Japanese trader, pegging his firm bid below $80/mt for fixed premium for the second quarter.

Several market participants cited the coronavirus pandemic and slow economic growth as major factors weighing on aluminum demand in Japan as well as globally.

"Will potentially book some more, but buyers are extremely worried and slow," the international trader said, eying interconnected bearish effects from coronavirus and macroeconomic retreat.

"I think fundamentally [the market is] remaining weak as long as the world is catching coronavirus," said a second international trader, adding that "the situation is going from bad to worse".

Three trader-consumer deals at $82/mt for Q2 shipments had been booked by Tuesday. However, sources said Western producers usually directly involved in quarterly premium negotiations with Japanese consumers and traders have not closed contracts with their counterparts in Japan due to a wide bid-ask gap and travel difficulties as many countries take measures to restrict travel in order to contain the spread of the virus.

Sources are also expecting more deals in the coming weeks. Quarterly premium talks normally finish by the end of the month prior to the subsequent quarter.

Platts daily spot Japanese import 99.7% Al P1020/P1020A premium was assessed at $73-$83/mt plus London Metal Exchange cash, CIF Japan on Tuesday, unchanged from Monday on lackluster spot trading.