CHINA ALUMINUM: ADC12 spot offers steady on tight supply despite weak demand


Offers for Chinese domestic spot aluminum alloy ADC12 generally remained steady Tuesday amid tight supply on plant maintenance shutdowns or lower operating rates to avoid high temperatures in summer, industry sources said.

Sources added that they had not seen any significant change in the physical demand, which had been rather lackluster during the current summer lull.

Platts weekly China domestic ADC12 price assessment was maintained at Yuan 15,200-15,700/mt ($2,463-2,544/mt) ex-works as most heard indications remained within the range.

An east China-based producer indicated offers around Yuan 15,550/mt, up Yuan 100-150/mt from two weeks ago, while, an east China-based diecaster bought a small tonnage from a trader around Yuan 16,000/mt, compared with previous purchase around Yuan 15,600/mt in mid-July.

The eastern Chinese producer said: "There are offers in the market around the Yuan 15,000/mt level but they are probably on special payment terms. They are also likely to be from small- and medium-sized plants, who have limited quantities."

Sources added that production costs had remained high, lending some support to Chinese domestic ADC12 offers despite lackluster demand.

Chinese domestic silicon (98.5% purity) prices generally had eased as production in China's major production bases of Sichuan and Yunnan had risen as power tariffs in the provinces had fallen in June with the start of the wet season in the hydro-power-dependent south. Silicon is a feedstock for ADC12 production.

Chinese domestic 553-grade silicon prices were heard at Yuan 12,100-12,300/mt this week, down from Yuan 12,400-12,500/mt last week. In August 2013, Chinese silicon prices were heard at the Yuan 11,000/mt level.

Chinese domestic spot aluminum ingot was priced around Yuan 13,890/mt Tuesday, compared with 14,020/mt a week ago, while August aluminum futures stood at Yuan 14,025/mt on the Shanghai Futures Exchange, unchanged from a week ago. In June, the spot aluminum was at Yuan 13,200-13,330/mt and the June futures contract was at the Yuan 13,300/mt level.

In Japan, the spot import trade was thin as the US dollar rose to Yen 102.60 from 101.80-102 a week ago, and Japanese buyers were waiting for the dollar to trade at Yen 101 levels, Japanese traders said.

Platts lifted its ADC12 export price assessment to $2,180-2,190/mt FOB China Tuesday, up from $2,160-2,170/mt based on higher indicated offers heard in the market.

Trade is slow this week also due to some customers closing from end of this week for summer holidays, added one Japanese trader.

An east China-based producer agreed and said he was expecting Japan's ADC12 import inquiries to stay thin for these two weeks as most Japanese buyers would have completed their procurements prior to the summer break.

Japanese trade and diecaster sources said Chinese producers were offering $2,200/mt CIF Japan or higher this week. There was no deal reported. One trader said his target buy prices were below $2,200/mt CIF Japan.

Several Chinese sources agreed that inquiries from Japan had been rare this week due to the weaker yen against the dollar.

An east China-based producer said his export offers were steady as supply was tight due to lower production rate during the summer, while the eastern Chinese producer lifted his offers on higher production costs.

"Our export offers are around $2,220/mt CFR Japan, up from $2,200/mt CFR two weeks ago. Production costs remain high with import Zorba-grade of aluminum scraps around $1,800/mt CIF China, compared with around $1,750/mt CIF two weeks ago," the second eastern Chinese producer said.

The price difference between CIF and CFR is negligible.

Chinese producers use import-grade aluminum scrap for exports.

Meanwhile, on Monday, the LME official cash price for aluminum was $1,978-1,979/mt, down from $1,987-1,988/mt last Monday but up from $1,964-1,964.50/mt last Friday.

Source from : Platts