Q3 MJP aluminium deals settle at record levels

Third quarter deals for aluminium delivery at main Japanese ports have settled at record levels of $400-408 per tonne cif basis, about 10% higher than the previous quarter, Metal Bulletin understands.

Third quarter deals for aluminium delivery at main Japanese ports have settled at record levels of $400-408 per tonne cif basis, about 10% higher than the previous quarter, Metal Bulletin understands.

By the close of business on Monday June 30, no deals had been reported to Metal Bulletin above $405 but after that third-quarter transactions took place for up to $408 per tonne and hence we are amending the upper end of our third quarter quote to that level from $405 per tonne previously.

Second quarter MJP deals had settled at $365-369 per tonne levels, over $100 higher than first quarter levels of $255-256 per tonne.

“Most deals we did were at $400-405 per tonne,” a trader from a large Japanese firm said, adding that they had also settled around $407 per tonne with one producer.

“We heard some deals were done at $408 but we didn’t settle at that level,” he added.

A second trader from another firm said: “Most of our contracts were done at $405, $407 and $408.”

The third quarter MJP range was $400-408 per tonne, he said, adding that the mid-point “should be $405”.

“Some producers say they have sold at $410 but I think the quantity was not so big and shouldn’t be considered [for the benchmark range],” he said.

Third-quarter MJP talks had started in May with major producers offering the light metal at premiums between $400 and $410 per tonne.

BHP Billiton had settled MJP talks with its customers at $400, followed by another major producer settling deals at $405 per tonne with a large rolling mill in Japan.

“In our case, the average is $405. We don’t have $400 and are doubtful of the $410 number reported elsewhere,” a source from a large rolling mill in Japan said.

Like other end-users, the source was concerned of the rising premiums.

“The suppliers are very bullish and they will try to increase the premium in the next quarter,” he said

“We are checking the US premiums,” he said, adding that if the London Metal Exchange stocks in the west start coming down, the market in the USA could soften and bring down premiums in the west and in Asia.

Higher premiums in Europe and the USA results in producers who can sell to both the western and Asian markets in selling to the former, the second Japanese trader source said.

Point Henry and Bayside closures have also added to the tightness in the market, he pointed.

“Going ahead, the market is strong for premiums and it’s not based on demand side but on supply side [challenges],” he said.

Narrowing spreads is the only way for premiums to go down, he said.

Asian premiums
Premiums in Singapore edged up to $300-310 per tonne in-warehouse, compared with $295-300 per tonne last week.

Premiums offered were closer to $320-330 per tonne levels but the market was “very quiet”, a trader from Singapore said.

Metal Bulletin’s Johor premiums had also risen to $300-310 per tonne, from $285-290 per tonne.

Shivani Singh
shivani.singh@metalbulletinasia.com
Twitter: @ShivaniSingh_MB

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