China's ADC aluminum export prices rise after Japan buy tender; domestic prices soften

Chinese auto diecasting aluminum alloy export prices rose this week on stable demand from Japan, but domestic prices softened following the weaker domestic primary aluminum prices, S&P Global Platts data showed.

Chinese ADC12 aluminum alloy export price was assessed at $1,800-$1,830/mt FOB China Tuesday, up from $1,790-$1,820/mt FOB China last week, as inquiries from Japan increased following Toyota Motor's first-quarter buy tender.

One Japanese trader reported buying 100-200 mt at $1,850/mt CIF Japan for February loading from Guangzhou or Shanghai.

A Chinese producer said several hundred tons were sold at $1,840-$1,850/mt CIF Japan so far this week, adding that he was expecting more inquiries from Japanese buyers later in the week.

Another Japanese trader said deals were heard at $1,830-$1,850/mt CIF Japan.

One Japanese consumer said he was not buying this week but heard other consumers, who had waited either for lower Chinese export offers or a stronger yen, were booking this week.

The Chinese offers did not move down but dollar traded at Yen 113.50 Tuesday, after approaching Yen 116 last week.

"Diecasters have production deadlines and need the material, this week is their time limit," the consumer said.

A price of $1,830-$1,850/mt CIF Japan is equivalent to $1,800-$1,830/mt FOB China, as container freight is $20-$30/mt.

Some Japanese buyers said deals closed at above $1,830/mt CIF as there were possibilities of Toyota Motor's Q1 tender award levels rising significantly from Q4.

The tender for around 10,000 mt of ingot and molten aluminum alloy for January-March delivery, closed last week, and results will be finalized by the end of the month.

Toyota buys on formulas floating on a price index published by a local industrial media. One tender participant forecast Toyota's Q1 prices at roughly Yen 215-220/kg ($1,900-$1,950/mt), basis unknown, up Yen 20/kg from the current quarter prices.

Toyota Motor declined to comment on its purchase activity. China's domestic spot aluminum alloy ADC12 prices slipped this week on the back of softer primary metal prices, market participants said Tuesday.

The Platts weekly China domestic ADC12 assessment stood at Yuan 14,400-15,000/mt ($2,100-$2,187/mt) ex-works basis, down from Yuan 14,700-15,300/mt last week.

The front-month primary aluminum contract on the Shanghai Futures Exchange closed at Yuan 13,730 mt on Tuesday, down from Yuan 13,990/mt last week, and also from Yuan 13,960/mt a month ago.

A Chongqing producer said prices in the region had fallen Yuan 200-300/mt from last week due to weaker aluminum prices, while South China producers said prices in their region had lowered just Yuan 100-200/mt on support from reduced capacity.

"Environmental inspections resulted in several shutdowns and cutbacks around here, so that is supporting prices from falling too much," a Guangzhou producer said.

A Jiangsu producer agreed, adding that similar environmental impact was also seen in the east of the country.

"We're selling at around Yuan 15,000/mt now, down from Yuan 15,200-15,300/mt last week," the Jiangsu producer said.

Restocking demand ahead of the Lunar New Year holidays on January 28, 2017, was also adding to ADC12 support in the near term, sources said.