Reuters reported that Japanese buyers have agreed an aluminium premium of USD 240 per tonne with Rio Tinto Alcan for some January to March shipments down from a record USD 254 to USD 255 PREM ALUM JP in the previous quarter.
Sources said that Rio Tinto Alcan offered premiums of USD 240 last month. The deal was lower than Alcoa's offer of USD 247 and BHP's USD 249. Premiums are paid over the benchmark London Metal Exchange cash price to secure physical metal.
A fall in the fee for buyers in Japan, Asia's biggest importers of the metal will be the first in more than a year as the economy slips into recession with exports falling and demand deteriorating in the domestic auto and electronics sectors.
A source at a global aluminium producer said that some deals have settled at USD 240 with Rio. Others are still in talks. Rio seems selling quite well so far better than what they had expected.
Aluminium premiums have more than doubled from this year's Q1 premiums of USD 112 mainly due to large stocks locked up by banks in financing deals and behind long queues at warehouses which make it difficult for manufacturers to access supplies.
Typically in such financial deals, traders buy physical metal and simultaneously sell forward at a profit while striking a warehouse deal to store it cheaply in the interim. High premiums and government subsidies have helped keep afloat many smelters that would otherwise have been forced to shut down due to a drop in global prices.
Source:
http://www.steelguru.com/metals_news/Rio_Tinto_and_Japan_set_Q1_aluminium_deals_at_USD_240_per_tonne_premium/295038.html
