Aluminium premiums still under pressure in Japan, Europe, Brazil, but US market quiet

  • Japanese premiums fall on increasingly bearish sentiment
  • Rotterdam premiums fall on higher import availability
  • Import deals under pressure in Brazil due to global recession
  • Steady US Midwest premium in subdued, holiday spot market.

MJP Premium Dip

The Japanese major port (MJP) premium fell in the week to Tuesday on increasingly bearish sentiment.

Twice weekly Fastmarkets evaluation of the aluminum P1020A (MJP) spot premium, cif Japanwas $85-95 per tonne on Tuesday, slowing to $5 per tonne from $85-100 per tonne on Friday, and $5 per tonne overall from $90-100 per tonne on August 30.

“Tradable volume is low, with no incentive to deliver to Japan. Japanese traders and end-users are reluctant to buy metal on the international market,” a Japanese trader says.

“There are a lot of stocks in Japan, and there are attempts to reduce stocks to avoid the pullback and its effects on balance sheets,” a Singapore trader said.

Despite announcements of smelter cuts in Europe, market participants remained bearish given high inventory levels in Asia, particularly Japan, and were more concerned about future demand.

“Although orders are good, inflation is [beginning to have an effect] and downstream sectors like the auto industry will be affected,” said the same Singapore trader.

On the other hand, fourth quarter negotiations have started, with offers heard below the level assessed by Fastmarkets in the third quarter of $148 per tonne.

Fourth quarter offers heard during the week were $133, $120 and $115 per tonne.

Elsewhere, the South Korean market was unchanged from the previous week amid soft buying activity.

“[There is] no change in South Korea: inquiry levels have been low,” another Singapore trader said.

Fastmarkets evaluated the aluminum P1020A premium, fca South Koreaat $110-120 per tonne on Tuesday, unchanged from the previous week.

the corresponding aluminum P1020A premium, cif South Koreawas assessed at $95-105 per tonne on Tuesday, also unchanged from the previous week.

European premiums down across the board

European aluminum premiums continued their downward trend in the week to September 6 as a result of weak one-off demand and good availability of imported units.

Fastmarkets evaluated the aluminum P1020A premium, in-whs dp Rotterdamat $430-480 per tonne on Tuesday, unchanged from Friday’s assessment but down from $450-500 per tonne a week earlier.

Various European foundries have announced cuts in energy-related production in recent weeksbut premiums continued to fall, with weak demand outweighing any potential supply concerns for now.

“Spot demand for bullion has been weak for the past six to eight weeks, and imports are currently outweighing lost capacity from production cuts. That really shows the extent of the problem,” said a European trader. “You only have to take a look at the German industry data to see how poorly demand is being managed. [affected] due to rising energy prices.

Germany’s industrial orders fell for the sixth consecutive month in July, down 1.1% compared to June, according to figures from the federal statistical office. Year over year, orders fell 13.6% and domestic orders fell 4.5% in July.

Unpaid tax premiums also moved lower, with reduced offers reported in the market in an attempt to attract more buying interest.

Fastmarkets evaluated the daily aluminum P1020A premium, in-whs dup Rotterdamat $360-400 per tonne on September 6, unchanged from Monday’s assessment, but falling from $380-420 per tonne a week earlier.

“I was talking to one of my extrusion customers,” said a second trader, “and he said, ‘Today, it’s not about the premium, we’re not about the price. For now, our focus is how to manage our own production, coupled with high costs and rising energy prices. We don’t really care what the premium is.’”

Elsewhere in Europe, premiums in Italy and Spain trended lower this week with participants returning to the market after their summer break.

Fastmarkets evaluated the aluminum P1020A premium, fca dp Italyat $470-500 a tonne on Tuesday, down from $500-550 a tonne a week earlier.

With the end of summer, concerns now turned to energy prices and supplies in the upcoming winter months.

“On the supply side, there is still plenty of metal available,” a third trader said. “More and more consumers are delaying, diverting or canceling [bookings for tonnages] where they can. There are many units available from different brands.”

Fastmarkets evaluated the aluminum p1020a premium, fca dp spainat $470-500 a tonne on Tuesday, down from $520-550 a tonne a week earlier.

Stable US premium: Ultimately, some hope

The benchmark aluminum premium in the United States was unchanged in the week to Tuesday, flat for two consecutive assessments for the first time since August 12.

The P1020 premium for primary aluminum is evaluated twice a week in the US, on Friday and Tuesday.

The US Labor Day holiday came in the middle of the last evaluation period, on September 5, resulting in no activity being reported in an already subdued spot market.

Fastmarkets evaluated the premium P1020A aluminum, ddp US Midwestat 24.0-25.5 cents per pound on September 6, stable since August 30.

The premium was at its lowest level since April 2021, having previously hit a 15-month low on August 19.

“I’m a little surprised at how far this drop has gone,” said a P1020 buyer on September 6. However, he agreed with the range assessed by Fastmarkets.

A second buyer said Thursday: “I must believe that [the premium] It’s close to bottoming out.”

However, this source, an aluminum secondary alloy maker that buys P1020, said prices for its products had fallen due to a general decline in the US aluminum market. “The overall aluminum market is trading at the go down,” he said.

For now, there was a status quo due to Monday’s holiday, multiple sources said.

“It’s very hard to fight that, once a number is out,” said a trader at P1020 of recent low price index assessments. “However, on a fixed price basis, we have achieved higher premiums of 25.5 to 26.5 cents per pound.”

Deals set to close at some upcoming industry events this month, including Fastmarkets’ International Aluminum 2022 conference in Barcelona, ​​Spain, on September 13-15, will help guide the premium, some sources said.

Premiums fall in Brazil

Brazil’s aluminum premiums fell in the fortnight to Tuesday, with the recent global downtrend putting pressure on import offers, and more competitive domestic material was enough to meet consumers’ needs, market participants said.

Fastmarkets evaluated the aluminum P1020A premium, cif dup main brazilian portsat $400-430 per tonne on Tuesday, down by $50-60 per tonne from $450-490 per tonne on August 23, and also its lowest since $380-410 per tonne on January 11.

New offers to the country were mostly reported within a range of $400-420 per tonne, with some being heard at $430 per tonne. However, at least one source believed European-sourced material would cost more, fetching a premium of $450 per tonne in some cases.

But the drop was not enough to spark greater consumer interest in the new shipments. Spot demand has been relatively stable for months and trading has slowed as September is typically the month in which annual contracts are traded.

Customers mainly turned to domestic production that was sold at lower prices, market participants said.

Fastmarkets evaluation of the premium P1020A aluminum, delivered in the São Paulo regionit was $400-450 per tonne on Tuesday, down $80-90 per tonne from $480-540 per tonne a fortnight earlier, and at its lowest level since $400-450 per tonne on February 8.

Imports were not considered in the assessment because they lost market share throughout 2022 due to record premiums. According to market participants, the new shipments would change hands at $500 per tonne or more on a ddp basis.

The domestic material P1020, on the other hand, was offered at lower prices.

While offers from São Paulo to customers within the state were around $450-470 per tonne, some offers were reported at $420-430 per tonne. And material from other parts of Brazil was changing hands in São Paulo at premiums of around $390-410 a tonne.

The gaps by product origin were due to different tax regimes that could offer value-added tax credits or deferrals for interstate sales. This meant that smelters outside the state of São Paulo were able to sell at more competitive premiums.

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