Japan Al Re-rollers and Offshore Smelters Enter Premium Talks for Apr-Jun

Japanese aluminium re-rollers and offshore primary aluminium smelters started premium negotiation for April-June 2011. Smelters offer premium hike by US$ 4-5 per tonne while Japanese re-rollers and traders aim to set premium unchanged from January-March. The premium is likely to be concluded at US$ 110-120 per tonne when aluminium demand maintains steady worldwide and premium represents high in advanced countries.

Japanese premium slightly downed to US$ 110-114 for January-March since aluminium demand weakened in Japan. For April-June, one concerned source said, aluminium users seem to be increasing procurement volume compared with the level in January-March. Automobile industry shows stable tone while re-rollers increase material inventory for the demand season of summer. Aluminium demand is also favorable in North America, Europe and emerging countries. Smelters say supply and demand balance of primary aluminium is globally tight.

Primary aluminium premium stays high in North America and Europe. Premium was as high as US$ 110 at a tender recently held by Public Procurement Service of South Korea. Meanwhile, premium was US$ 105 at another tender held by Japanese major automaker. Smelters are not concerned on low premium of this tender, according to a source.

Primary aluminium inventory held by London Metal Exchange is currently exceeding 4.6 million tonnes but 70% of the inventory seems to be related to warrant finance. There is no market mood of oversupply.