Vietnam¡¯s spot aluminum demand picks up as China¡¯s semis exports fall

Spot import demand for primary aluminum ingot in Vietnam has picked up in the last month or so, as exports of Chinese remeltable semi-finished products decreased, trader and producer sources said Wednesday, May 13.

Spot deals have closed this month at $200-$230/mt plus London Metal Exchange cash, CIF main Vietnam port, said Japanese and South Korean traders.

The deals were for lots ranging 100-1,000 mt, mostly for June delivery, said traders.

One lot of less than 300 mt was confirmed to be Middle Eastern in origin.

Sources attributed the increases in the Vietnamese spot demand to Chinese supplies of remeltable semi-finished products, used as ingot substitute, decreasing.

“Fake aluminum in Vietnam is not as visible as before,” said a producer source.

The spread between Shanghai Futures Exchange and London Metal Exchange aluminum prices narrowed since March.

Chinese semis are traded into Vietnam on the basis of LME prices, and the rising SHFE prices made it less attractive for Chinese traders to export, sources said.

China’s semis exports decreased to 298,926 mt in March, compared with 480,000 mt in December, according to Russian aluminum producer Rusal.

Aluminum ingot demand in Thailand was also increasing, said two traders, adding deals have closed in the range of $200-$390/mt plus LME cash CIF main port.

Details of the deals, however, were not available.

“Trade had stalled due to high stocks. Customers have adjusted stock levels and have started to buy,” said one Singapore-based trader.

Spot demand in Taiwan, Malaysia and other parts of Asia was slower to recover compared to Vietnam and Thailand, sources said.

A Japanese trader said a decrease in the Chinese supplies was having an impact already, adding that he has closed deals for several-hundred-ton lots at $150-$200/mt plus LME cash CIF.

Other details, such as shipping destinations, were not disclosed.

Other sources said there is no visible increase in inquiries yet from Taiwan, Malaysia and other Southeast Asia countries, as buyers appeared to have enough supplies at hand.

Sources agreed that Chinese export trend is the main market factor for Asia they monitor closely.

“Total aluminum stocks in China grew to 3 million mt in Q1 2015, up 1% year on year,” said Rusal in its financial results report Wednesday.

The low SHFE prices in Q1, down 2.6% year-on-year, also contributed to the mounting stocks, Rusal said.

The most actively traded July 2015 aluminum contract on SHFE was hovering at around Yuan 13,380 ($2,189)/mt Wednesday according to the exchange website.

The LME settlement Tuesday was $1,855/mt.

If the Shanghai Futures Exchange prices fall significantly below LME, China may start exporting, sources said.

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