Emirates Aluminium plans entry into Japan quarterly premium talks

Emirates Aluminium plans to make its debut in the negotiations for thequarterly premiums for primary aluminium exported to Japan starting from thethird quarter, market sources said Wednesday. 

One Japanese aluminium buyer confirmed its plan to meet with Itochu, anEmal sales agent, in the coming weeks to negotiate premiums for the thirdquarter shipments from Emal. The company eyes signing a quarterly supplycontract with the Middle East-based smelter from July.  This would be Emal's first long-term contract with Japan.  

Local market sources said only a handful Japanese buyers are likely tosign term contracts with Emal this year as they are on annual contracts withAustralian and South African producers for the remainder of the year.

But Emalcould gain a significant share in the Japanese market due to its high metalquality.   The Emal brand has not been registered with the London Metal Exchangeyet, as the company delivered first ingot products to an Abu Dhabi-basedcustomer only last month.

LME registration certifies that the metal is GoodWestern-grade with 99.7% aluminium and less than 0.2% iron and 0.1% siliconcontent.

 In the past, non-LME registered metal from the newly launched smelterswas sold with lower premiums. But spot premiums for Emal shipments so farwere equal to other Good Western brands, said a trader at Itochu.  Most Japanese consumers require the metal on long-term contracts to beLME-registered.  "We have tested Emal and its metal content has proven to be very stable.

It is good metal and we are very interested in it," said one consumer source,adding that the LME registeration is not an issue for Emal.  According to the Japanese customs, the United Arab Emirates exported11,108 mt of primary aluminium to Japan over January-March 2010, surgingfrom 2,842 mt in the same period in 2009.  Out of the 11,108 mt, 3,817 mt went to the Nagoya port, 2,436 mt toYokohama, 2,032 mt to Osaka, 1,930 mt to Toyama, 512 mt to Hakata, and 379 mtto Sakai.  The UAE has two aluminium smelters, the 536,000 mt/year Dubai AluminiumCompany, and Emal, which is expected to produce 700,000-750,000 mt/year ofaluminium by the end of 2011.

source:www.platts.com