South Korea aluminum: Falls $7.50/mt on week to $90-$100/mt on selloff

South Korean primary aluminum premium spot market at $90-$100/mt plus LME cash, CIF Busan, Wednesday, for duty unpaid P1020 ingots with a maximum iron content of 0.14%.

The assessment shed $7.50/mt week on week as stock holders at local warehouses tried to liquidate some volumes before the end of the fiscal year.

High warehouse inventories and a backwardated LME forward curve also deterred traders from picking up new shipments, sources said.

A producer source said he would not rule out the South Korean spot premiums slipping below $95/mt soon, for shipment in October.

A trader reported the sale of 2,000 mt to a consumer at $90/mt plus LME cash, CIF Busan, comprising metal from Australia and the Middle East.

A consumer reported turning down the chance to buy metal at $90-$95/mt CIF of Australian, Indian and Middle Eastern origins.

The source said he had sufficient stocks for October and might wait for the backwardation to pass before topping up again.

The source also said suppliers may be prepared to give him access to Q4 volumes even before finalizing the premium.

A second trader heard a domestic trade at $95/mt plus LME cash, FCA basis, for 6,000 mt to be delivered over Q4.

A slowdown in South Korea’s manufacturing activity including the automotive sector, is also placing downward pressure on local aluminum premiums, the source said.

India’s Nalco awarded on September 10 at $72/mt plus LME cash, CIF Singapore, a sell tender for 3,750 mt of P1020 aluminum ingots to be shipped in three 1,250-mt lots between September and November, a company source said.

The tender closed September 8, with validity until September 10. Market participants have said that although Nalco’s tender documents call for the metal to be delivered to Singapore, the shipments rarely end up in Singapore.

South Korea is a regular outlet for Nalco aluminum, with other Asian destinations such as Vietnam, China and Thailand also taking deliveries.

Nalco levies freight upcharges of $19/mt to direct the shipments to South Korea’s Busan port, and $23/mt to Incheon.

Platts South Korean aluminum spot assessment reflects the premium or discount to the LME cash price for P1020A ingots CIF Busan basis, duty-unpaid, for P1020 of any origin, with a typical trade volume of 200 mt to 2,000 mt for loading in the next 30 days.

The specifications are P1020A ingots to meet minimum LME specification, 99.7% Al min, max 0.1% Si, 0.2% Fe, 0.03% zinc, 0.04% gallium, 0.03% vanadium.

The assessment is normalized to reflect metal with a maximum iron content of 0.14%, reflecting dominant trading patterns in South Korea.

Source: Platts

Zhejiang Yaang Pipe Industry Co., Limited (www.yaang.com)