Japan Primary Al Buyers Seek Lower Japan Premium for April-June

Japanese primary aluminium buyers started price negotiation with offshore suppliers for April-June shipment. The Australian suppliers apparently offer around US$ 130 per tonne of Japan premium to keep the premium as January-March level. The buyers resist the high premium under slow domestic demand and try to reduce the premium by around US$ 10.

The premium is US$ 128-133 per tonne for January-March, which was around US$ 15 higher than October-December 2009 due to worldwide tight supply. The suppliers offer the same level of premium at the ongoing negotiation under firm demand in Asia, according to Japanese trading firm source.

Asian buyers mainly in South Korea, Taiwan and Southeast Asia apparently increase the spot order to the suppliers when the demand recovers. A source said Australian smelters operate at full capacity under the higher demand. Japanese buyers also operate light metal rolling and extrusion operations at around 80% of the peak. Some Japanese buyers increase the primary aluminium purchase in April-June.

The premium in Europe and USA shows sign to keep high level. The supply is tight in Europe due to ongoing major production cut by loss making smelters. Some major smelters will close the operation in Europe depending on the market condition.

Japanese trading firm source said Australian suppliers fail to recognize recent easing supply condition when Russian smelters expand the supply and other smelters in India and Middle East try to sell more in Asia.