Chemical News
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China aluminum: ADC12 trade stays thin awaiting stability in SHFE, LME
http://www.chemnet.com May 11,2016 Platts
SHFE and LME primary aluminum prices trended down this week, after hitting multi-month highs in April. SHFE May hovered at Yuan 12,000/mt ($1,846/mt) early while LME three-months was at $1,559-$1,562/mt Tuesday.
Chinese end-users, and buyers outside China, were waiting for signs of stability in the exchange-traded aluminum prices.
"Chinese domestic customers don't want to buy. When prices show signs of a downfall, they stop buying," said a Chinese producer. He was offering at Yuan 13,800/mt delivered Shanghai area, inclusive of 17% value added tax. There was no spot inquiry, however.
"I did not buy for the past three weeks, no new orders," said a Chinese diecaster source, adding that his most recent purchase was at Yuan 13,000/mt, lower than the current offer levels. Other market participants reported offers at Yuan 13,000-13,800/mt ex-plant.
Platts assessed China domestic ADC12 price at Yuan 13,400-13,700/mt ($2,068-$2,114/mt) Tuesday, unchanged for two weeks. Sources said Chinese export trades were similarly thin.
One Japanese trader said he was offered $1,760-$1,800/mt CIF Japan for June loading, but was not buying at all as he was waiting for a further slide in LME prices which will put downward pressure on the ADC12 export offers.
He was also waiting for the yen to strengthen to Yen 105 against the dollar from Yen 108 Tuesday.
A Chinese trader said offers were at $1,720-$1,750/mt CIF Japan but he had not received inquiries.
Chinese producers also said they needed to cover high scrap feedstock costs and would not decrease offers in order to attract buyers.
"I have lowered my offer by $10/mt on LME price fall, but feedstock costs remain high. Zorba scrap prices remain high amid tight supply. Zorba sellers have chosen to keep their limited stocks until prices are better," said a producer. He said zorba scrap with 3%-5% copper were offered at $1,450-$1,500/mt CIF China for June-July.
Japanese buyers said there were other reasons to wait.
Mitsubishi Motors shut one of the two lines at the Mizushima assembly plant in west Japan following the emission data fraud issue that was unveiled last month.
The closed line was for light vehicles that came with fraud data, accounting for around 30% of the company's total vehicle production, which stood at 652,966 vehicles in the April 2015-March 2016 period.
Concerns are spreading that the automaker may be forced to close other manufacturing lines should government investigation efforts spread to other types of vehicles, sources said.
"So far, orders for components for standard passenger cars remain unaffected," said one Mitsubishi Motors component supplier source.
Only a handful of deals were reported.
One Japanese trader reported buying at $1,760/mt CIF Japan for June loading from South China. A producer reported selling at $1,830/mt CIF Japan. Both deals were for less than 500 mt each.
Platts kept the ADC12 export price assessment steady at $1,720-$1,740/mt FOB China, flat for two weeks. Freight costs to Japan are around $20/mt.
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