Aluminum Fees to Japan Seen Reaching Record on Brazil Output Cut By Aya Takada Aug 22, 2014 Aluminum buyers in Japan, Asia’s largest importer, are set to agree on a record quarterly fee after lower output from Brazil deepened a global deficit, said three executives who will start negotiations next week. The surcharge for the three months from October to December may rise 8 percent from the premiums this quarter that range from $400 to $408 a metric ton above the London Metal Exchange cash price, according to the executives who represent buyers and sellers. They asked not to be identified because the negotiations are confidential. Production in Brazil, owner of the world’s third-largest ore reserves, fell in July to the lowest level in data going back to 1996. The country’s worst drought in decades drained reservoirs used to run hydroelectric generators that supply power to extract aluminum. Premiums to Japan surged more than 60 percent this year and reached records every quarter. “Japanese buyers will have to pay more for the metal as domestic demand stays healthy and a surplus in the global MARKET is disappearing,” said Naohiro Niimura, partner at Market Risk Advisory Co., a researcher in Tokyo. The aluminum industry has closed or curbed output at more than 50 smelters outside of China since 2009 and global demand will exceed output by 579,000 tons this year and 619,000 tons in 2015, Goldman Sachs Group Inc. said in a report July 23. Rising costs for electricity and labor will accelerate output cut, said Niimura, who forecasts worldwide production will almost be balanced with consumption this year, revising his prediction in June for 1.21 million tons of surplus.
Posted on: Fri, 22 Aug 2014 09:56:01 +0000