TOKYO (Scrap Monster): The spot demand for aluminum continued to remain weak. The import premium on aluminum held steady at $240-250 per mt plus LME cash CIF Japan. The premiums remained unchanged when compared with the previous month. Majority of local Japanese buyers and overseas exporters reported lack of trading activity during the period.

 

According to suppliers, inquiries from Japanese domestic aluminum buyers have dried up over the period. The Japanese domestic consumption of aluminum is likely to remain subdued during the forthcoming months, in line with earlier forecasts. South Korean traders were seen more interested to sell in Southeast Asian markets, although the lot size remained thin.

 

The LME price movements are being monitored closely. Amidst high stocks of the metal worldwide affecting trades, the rise in LME prices above the $1,900/mt levels has injected hopes that the downward trend in metal may likely reverse going forward. This is likely to end the aggressive sales that took place at extremely low premiums last week.

 

Market participants believe that significant rebound in North American and European premiums along with decline in Japanese main port stocks could be considered as an indication that the bottom levels are reached. However, European spot premiums slumped to almost 50% during the Japanese Golden Week holidays. The US spot premiums too fell drastically from levels of 14.15 cents/lb on April 28 to as low as 11.75 cents/lb on May 8th. This suggests that a bottom is still not reached.

 

Traders expect the third quarter contract premiums to settle around $300 per mt, significantly down when matched with $380 per mt during Q2. The Q3 premium talks are expected to commence later this month.