Chinese aluminum: ADC12 alloy offers rise on higher primary aluminum prices


Offers for Chinese domestic spot aluminum alloy ADC12 rose amid higher primary aluminum prices, but the fresh demand seen lately is expected to weaken as buying thins out towards the year-end, sources said Tuesday.

Platts lifted its weekly China domestic ADC12 assessment to Yuan 12,100-12,500/mt ($1,886-$1,948/mt) ex-works Tuesday, up from Yuan 12,000-12,400/mt the previous week on higher bids, offers and done deals heard.

"Primary aluminum prices have rebounded, lifting export offers. The Chinese domestic offers are slow to react," said an east China-based analyst, who heard offers steady at Yuan 12,000-12,300/mt ex-works but agreed that the domestic ADC12 offers would rise.

An east China-based producer, however, has lifted his offers to Yuan 12,400/mt, up about Yuan 100/mt week on week, while an east China-based diecaster said he had bought a small tonnage from a trader at Yuan 12,600/mt last week.

"Most plants are fulfilling existing orders but I have also heard new orders in the market as some plants may be rushing to meet year-end needs," the eastern Chinese producer added.

The eastern Chinese diecaster said: "The market seemed to be active. Maybe people are buying to meet their year-end needs. Offers have also gone up due to higher primary aluminum prices. We will also be busy until the new year."

Another east China-based producer said she had no stocks to offer but reckoned that offers had gone up in view of higher primary aluminum prices.

Chinese domestic spot aluminum ingot was priced at Yuan 10,140-10,180/mt Tuesday, compared with Yuan 10,080-10,120/mt last Tuesday and Yuan 9,730-9,770/mt two weeks ago, according to state-owned nonferrous metals information division Beijing Antaike.

December aluminum futures were at Yuan 10,340/mt on the Shanghai Futures Exchange Tuesday, compared with Yuan 10,240/mt last Tuesday and Yuan 9,870/mt two weeks ago.

On Monday, the official cash price for aluminum on the London Metal Exchange was $1,497.50-1,498/mt, up from $1,441.50-1,442/mt last Monday and $1,423.50-1,424/mt two weeks ago.

In Japan, Chinese export offers below $1,600/mt CIF Japan were no longer heard in the spot market this week as Chinese producers hiked offers on the back of tighter scrap supplies, Japanese buyers said.

Platts assessed its ADC12 export price at $1,610-1,640/mt FOB China Tuesday, up from $1,590-$1,630/mt the previous week on higher bids and offers heard.

The lowest offer Tuesday was at $1,610/mt CFR Japan, January and February loading from China, while the highest offer was at $1,670/mt CIF Japan, February loading. The price difference between CFR and CIF is negligible.

Three Japanese buyers said they were seeking to buy at less than $1,600/mt CIF Japan. Last week, one trader had sold around 100 mt at $1,580/mt CIF Japan.

Two buyers said due to tighter scrap supplies in regions with heavy snow, Chinese ADC12 prices are unlikely to fall below $1,600/mt CIF Japan and Japanese buyers will have to accept higher prices, while one Japanese consumer said he was going to wait as there may be one price dip below $1,600/mt before stabilizing above $1,600/mt in the coming weeks.

Japanese buying was active in the past week or so before the recent hike in offers, Japanese traders said.

Japanese trading houses, that have signed January-March supply contracts with Japanese automakers started to buy for the entire Q1 as they were expecting alloy spot supplies to tighten in the coming weeks on the back of seasonal tightening of scrap and the Chinese plants closing for Lunar New Year holidays in February.

"One producer has sold out January shipments and had only late February shipments to offer," said a Japanese trader.

Japanese domestic ADC12 prices, for prompt delivery within the month, were heard at around Yen 215/kg ex-warehouse or $1,650/mt without local freight and handling charges.

Chinese sources agreed that export offers to Japan had gone up mainly due to the rebound in primary aluminum prices and stronger imported aluminum scrap prices as supply had tightened on collection transportation woes during winter.

"I'm offering at $1,650-$1,660/mt CIF Japan, up from $1,640/mt last week. The demand from Japanese buyers is still not so good but the imported scrap price has gone up," said an east China-based producer.

He heard imported zorba-grade aluminum scrap around $1,200/mt CIF China this week, up from around $1,100/mt last month.

Another east China-based producer said: "Yes, I'm hearing export offers have gone above $1,600/mt CIF Japan this week on higher scrap prices.

Tense grade of aluminum from the US west coast is around 53 cents/lb, compared with 52-53 cents/lb last week and tense tabor from the US west coast is around 48 cents/lb, compared with 44-45 cents/lb."

A third east China-based producer said: "The Japanese are willing to pay more for ADC12 now as prices have stopped falling and are rising steadily. I have no more stocks but I heard offers are at $1,630-1,640/mt CIF Japan this week."

This eastern Chinese producer sold at $1,610/mt CIF Japan last week.

Source from : Platts