Tuesday, November 30

Aluminium fees in Japan seen near record in 1Q on Abe stimulus

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ALUMINUM premiums in Japan probably will hold near record levels in the first quarter (1Q) as Prime Minister Shinzo Abe continues economic stimulus and supply is disrupted, according to four executives who are scheduled to start price negotiations next week.

Surcharges for the three months starting in January are likely to be set around this quarter’s US$245 to US$246 a metric tonne over the London Metal Exchange (LME) cash price, said the Tokyo-based executives, who represent buyers and sellers and asked not to be identified because they are not authorised to speak to the media. Premiums in Asia’s
biggest importer of the metal reached a record US$255 in the 4Q of 2012.

Shipments of rolled-aluminum products by Japanese fabricators expanded for a third month in September as the Bank of Japan’s record stimulus and Abe’s plan to raise sales taxes boosted orders for houses and motor vehicles, increasing demand for the metal. Supply has been crimped by a partial shutdown at a Saudi Arabian smelter and the end of a pact with an Indonesian supplier, the executives said.

“Growth in demand will accelerate this quarter and next as construction work picks up and car sales gather pace before the tax increase in April,” said Koji Iida, the head of statistics at the Japan Aluminium Association.

Premiums in Japan more than doubled last year as fees in the US and Europe rallied. While the surcharge declined this quarter from the three months ended September 30 as the London bourse decided to change rules to speed up withdrawals from warehouses, it has remained above US$240 throughout 2013. — Bloomberg