Aluminum Coil buyers in Japan, Asia’s largest importer may pay a record fee to producers after China boosted purchases and global smelters cut output.
Four executives, representing smelters and buyers said before pricing talks this month that premiums for the three months starting in July may climb more than USD 30 from fees this quarter between USD 115 and USD 127 per tonne over the London Metal Exchange cash price. The highest fee since Japanese buyers began purchasing most requirements through long-term contracts in 1996 was USD 125 to USD 130 for the Q1 of 2010. Enlarge image Aluminum Coil Buyers in Japan to Pay Record Fee as Supply Drops
Premiums are poised to surge as demand is expanding in Japan, led by the auto and construction industries because of rebuilding from last year’s earthquake and tsunami. Buyers in China, the biggest consumer, boosted imports as they took advantage of international prices that were below domestic levels. Alcoa Inc the largest US producer cut 12% of capacity in January and CEO Mr Klaus Kleinfeld said last month the reductions may not be the end.
Mr Kunio Ishikawa director at the Japan Aluminium Coil Association said that “As demand is picking up, buyers may have no other option but to pay more to secure supply.”
Shipments to Asian buyers decreased after Norsk Hydro ASA, Europe’s third largest producer cut annual production at its Kurri Kurri smelter in Australia by a third or 60,000 tonnes in January spurring importers to seek alternative supplies.
Availability in Asia also declined after producers in the Middle East boosted shipments to Europe and the US where the metal traded at higher premiums than Japan. The US Midwest premium added to the price of immediate delivery aluminum coil, climbed to a record 11.5 cents per pound while premiums in Europe advanced to USD 160 per tonne.
Japan’s shipments of rolled aluminum products are forecast to gain 2.8% to 2.06 million tonnes for the year to March 31st 2013, the highest level in 5 years.
Demand expansion is led by the auto industry as companies such as Toyota Motor Corporation and Honda Motor Company benefited from surging domestic sales after the government offered subsidies for purchases of fuel efficient vehicles. Motor vehicle sales for March were the highest since March 2006, up 49 percent from the previous month and 78% from a year earlier.