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Japan’s spot aluminum premiums fall on backwardation pressure

Japanese spot aluminum import premiums fell Friday as a keen seller emerged on the back of widening backwardation in the October-November London Metal Exchange aluminum contract spreads, market sources said.

Platts assessed spot aluminum premiums at $87-95/mt plus LME cash CIF Japan Friday, compared to $90-95/mt plus LME cash CIF Japan Thursday.

One trader made a spot offer to another trader for over 500 mt for prompt shipping of Australian, South African or Middle East origin cargo was reported at around $87/mt plus LME cash CIF Japan.

Another Asian trader, also with an interest to sell to Japan, however, said he was not offering spot and wanted to wait until the fourth quarter contract premium negotiations settle.

“I do not want to end up selling lower than the Q4 premiums,” he said.

The fourth-quarter contract premiums are now discussed between the offers of $100-110/mt plus LME cash CIF, and bids at $80-90/mt plus LME cash CIF. The negotiations, that started in late August, are continuing into next week.

The October-November backwardation spreads widened to $13/mt Thursday, compared to $8/mt earlier in the week.

The January-February contracts are also in $2.50/mt backwardation, sources said.

“Backwardation certainly discourages buyers. A lot of buyers are putting their purchase plans on hold because the economic environment could be a lot worse than they think,” said one Japanese consumer, who did not report any deal.

Source: Platts

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