China`s aluminum import premiums slip to $130-$150/mt CFR basis
Source: www.chinamining.org Citation: Platts Date: May 28, 2015
Chinese import premiums for Good Western aluminum slipped further this week to $130-$150/mt CFR plus LME cash, down from $150-$200/mt last week and also from $260-$280/mt in April.
Market sentiment remained bearish as aluminum prices remained low on the London Metal Exchange, aluminum premiums to South Korea and Japan narrow, and domestic Chinese metal outlook bearish, sources said.
There was a lack of actual import trade to China this week despite the lower LME and premiums, as domestic Chinese aluminum prices continued below import levels, sources added.
"The arbitrage window is opening and we`ve had queries asking about premiums again, but the Chinese still cannot work with the current levels -- there`s still a gap of a few hundred yuan between import and domestic metal prices," a Shanghai-based trader said.
"There`s also expectation that Chinese domestic metal prices will lower further, maybe dropping below Yuan 13,000/mt again, so there`s no rush to buy," he said.
Another Shanghai-based trader agreed, adding that the market was also eying the third-quarter contract talks starting in Japan in the near term, which is widely expected to settle at much lower than the second-quarter premium of $380/mt.
"The arbitrage window is almost there, but not yet...people expect Q3 for Japan to be much lower, so they are all very cautious," he said.
A north China consumer said they were offered premiums this week at $135/mt delivered to Shanghai bonded warehouses, but were not interested.
"It`s still not enough. We expect Japan Q3 to drop to $100 plus, so we want to wait," the consumer source said.
Offers ex-Shanghai bonded warehouses this week were heard at around $200/mt, sources said.
The LME official cash price closed at $1,710.00-$1,710.50/mt on Monday, down from $1,749.50-$1,750.00/mt a week earlier.
At $1,710/mt, with the current $130-$150/mt premiums, and taking into consideration 17% value-added tax, the delivered price to China would equate to about Yuan 13,447-13,592/mt ($2,197-$2,221/mt).
On Wednesday, the front-month June aluminum contract on the Shanghai Futures Exchange closed at Yuan 13,090/mt, down from Yuan 13,115/mt a week earlier.
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