China aluminum: ADC12 spot offers slip on thin trade, weak buying
Source: www.chinamining.org Citation: Platts Date: August 20, 2014
Offers for Chinese domestic spot aluminum alloy ADC12 slipped Tuesday in thin trade with little physical buying interest during the current summer lull, industry sources said.
Platts lowered its weekly China domestic ADC12 price assessment to Yuan 15,000-15,500/mt ($2,442-2,524/mt) ex-works Tuesday, from Yuan 15,200-15,700/mt last week.
A southwest China-based producer, who heard most market indications around Yuan 15,000/mt, said: "The weather is hot in summer, forcing some diecasting plants to lower their production rates or to shut their operations to avoid high temperatures."
An east China-based producer, however, said: "The weather is not as hot as previous years. In fact, it is quite cool. Some diecasting plants who still have orders to fulfill will continue to operate during the summer."
The eastern China-based producer indicated his primary aluminum ingot-fed ADC12 at Yuan 15,800/mt.
"The scrap-fed ones are Yuan 300-500/mt lower [than my primary aluminum-fed ADC12]," this eastern Chinese producer added.
An east China-based diecaster, who bought a small tonnage around Yuan 15,000/mt from a trader, said the company would skip the summer break as it had to fulfill orders.
Another east China-based producer said it was quite usual for the domestic market to be quiet during the middle of the month as end-users would make their purchases at the start and the end of the month.
This second eastern Chinese producer lowered his domestic offers to Yuan 15,450/mt, down Yuan 50/mt from last week due to the lack of buying interest.
Sources said rangebound aluminum ingot prices had also dampened ADC12 offers.
Chinese domestic spot aluminum ingot was priced around Yuan 14,020/mt Tuesday, compared with Yuan 13,940/mt Monday and Yuan 14,000/mt last Tuesday, while September aluminum futures stood at Yuan 14,110/mt on the Shanghai Futures Exchange compared with Yuan 13,995/mt the previous day and Yuan 14,130/mt last week.
In Japan, the ADC12 spot import trade remained stalled due to the US dollar approaching Yen 103, from 102-102.50 a week ago, Japanese market sources said.
Platts kept its ADC12 export price assessment at $2,180-2,190/mt FOB China Tuesday, unchanged from last week as bids and offers were within the range.
Offers were at $2,210-2,250/mt CFR Japan, late November shipments. A Japanese consumer said his buy idea was around $2,210/mt CFR Japan. No deals were done, however, as buyers were waiting for the US dollar to fall back to Yen 102.
The demand outlook was positive, as Japanese automakers were expected to keep the current output level for the remainder of the year, said Japanese diecaster sources.
"The July-December vehicle output outlook of our customer is a 10-20% rise from April-June, but forecast start out bullish and is revised down gradually to compromise with the reality," said one Japanese diecaster source.
Chinese sellers were indicating export offers at similar level.
"The export trade to Japan is not very active due to the summer holidays among Japanese auto and diecasting plants," said a southwest China-based producer.
An east China-based producer said: "We have lowered our export offers to $2,215/mt CIF China, down $5/mt from last week as Japanese buying interest has been very thin due to the summer vacation and a weaker yen."
Meanwhile, despite rangebound primary aluminum ingot prices, Chinese sources said the supply of Zorba-grade aluminum scrap had remained tight, thereby keeping import offers above $1,800/mt CIF China. Chinese producers use import-grade aluminum scrap for exports.
On Monday, the LME official cash price for aluminum was $1,994-1,995/mt, compared with $1,979-1,980/mt last Friday and $2,030-2,032/mt last Monday.
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