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Chinese importers delay, resell contracted aluminium

Aug 2nd 2015 at 9:31 AM

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* Chinese importers delay or resell contracted aluminium* Bonded aluminium stocks rise on record imports* Premiums fall but still relatively strong on supplyHONG KONG, July 30 (Reuters) - Chinese importers are delaying or reselling contracted primary aluminium shipments after a 23 percent rise in LME aluminium prices <MAL3> in the past 2 months, trading sources said on Thursday.Falling demand from China is expected to ease supply tightness for spot metal in Asia, which could pressure spot premiums in the third quarter."We have some clients asking us to slow the delivery of contracted shipments," a supplier source said.He added that the closure of the arbitrage window -- buying from the LME and selling in spot or futures markets in China -- was reducing import margins.Chinese aluminium prices have lagged behind LME prices, following increasing domestic production and record imports in the first half, which rose a stunning 16-fold.About 700,000 tonnes of primary aluminium may be stored in warehouses in China, while traders said high arrivals of foreign metal may have added more than 100,000 tonnes of metal in bonded warehouses in Chinese ports this month. [ID:nHKG22513]Those bonded stocks are ready to go into the Chinese spot market if the arbitrage window reopens.Foreign sellers had asked for lower premiums for spot primary aluminium ingots to China, against June's $130-$150 per tonne over cash LME aluminium prices <MAL0>, because of weaker demand, traders said. But the premiums were still relatively strong around $100 because major foreign sellers were limiting supplies.About 70 percent of the stocks in LME warehouses -- 3.18 million tonnes -- is thought to be tied up in financing deals until May 2010. [ID:nLL175677]But some Chinese importers preferred to resell the metal due to arrive soon or already in bonded warehouses at lower premiums to obtain cash, traders said.A Chinese investor said his firm had bought 3,000 tonnes of bonded aluminium stocks in Guangdong province at premiums of $50 a tonne and was being offered another shipment due to arrive soon at premiums of around $80.

 

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