Asia Metals-Aluminium premiums firm, supply tight despite stocks

Aluminium premiums in Asia held firm last week, despite record stocks in London Metal Exchange warehouses around the world, and a sharp decline in activity due to the summer lull in manufacturing.

Premiums for material from Indian smelter Nalco were $89 a tonne on a cost insurance freight Singapore basis, well above $45 seen at the start of the year, dealers said.

"There are buyers for spot aluminium willing to pay $85/90 a tonne," a trader in Singapore said. "Brokers are asking for even higher numbers."

Japan's primary aluminium buyers agreed to a roughly 30 percent hike in premiums for the next quarter, the first rise in a year.

Industry sources said the term premium had mostly been agreed at $75 per tonne over the LME cash price, including insurance and freight costs, for the July to September quarter. This compares with $56-$58 in the current quarter.

A few early deals for Q3 were done at $68, but these were believed to account for a small portion of total transactions, while some bullish sellers pressed for a premium of $78 given the halt in exports from indebted Russian aluminium company United Company RUSAL.

"Premiums really don't deserve to be this high. Admittedly there isn't much Russian stuff around and a large part of the metal in warehouses in tied up in financing deals, but the fact remains stocks have never been higher and demand is very weak," a second trading source said.

LME stocks of aluminium at 4.37 million tonnes are sufficient to make enough standard 6 metre aluminium ladders to stretch 1.6 million kilometres (1 million miles)

Copper premiums held steady, as low stocks of the metal in the region were matched by equally lacklustre demand.

About 100 tonnes of copper are available in Singapore warehouses, while across Asia east of Suez, LME inventories stand at just over 1,100 tonnes or 0.4 percent of the global total.

"Business has more than tapered off -- dropped off a cliff is probably fairer -- but customers will turn buyers when copper falls towards $4,200," the first dealer said.

"There is very little metal available in Singapore. You are as likely to find uranium in Singapore as copper," he said, adding that private copper stocks were available at $110 in South Korea.

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