Japan's spot aluminum premiums continued to hold at $66-$74/mt plus London Metal Exchange cash CIF Japan Monday, unchanged from August 24 in a thin market.
No transactions, offers or bids were reported as major international traders based in Singapore, the most active spot sellers, were away due to a public holiday.
The wider LME cash-three-month contango spread, which buoyed spot premiums in some markets, had limited impact on Japan, as market participants sought market direction in the fourth-quarter contract premiums rather than in the LME spread.
The Q4 negotiations, which started late August, are ongoing.
One Japanese buyer agreed to set the Q4 premium at $75/mt plus LME cash CIF Japan last week with one producer, down from $90-$93/mt for Q3.
Market participants are closely watching so see whether other Japanese buyers also agree at $75/mt or seek lower levels.
One Japanese buyer said he considered $75/mt premiums to be too high, while a producer said that despite the $75/mt settlement, his offer remained at $80-$82/mt plus LME cash CIF Japan.
On the impact of the LME spread, some Japanese traders said there may be fewer spot sellers as the wider spread would allow them to hold inventories.
The LME cash-three-month spread has held at a contango of around $15-$20/mt for the past two weeks, widening from a $10-$15/mt spread in early August.
But keen sellers remain keen as they have heavy stocks, a non-Japanese trader said.
Market participants were mixed on the reasons for the wider spread.
Some market participants said the rising stocks at some LME warehouses in Asia could have caused the decline in LME cash aluminum contract prices.
Some also noted that the cash-three-month spread was widening not just in aluminum but across LME-listed metals, as a result of the fall in the cash contract prices.
The most recent LME cash aluminum settlement was $1,567.50/mt, the lowest in almost three months.
"There are fewer market participants selling LME forward contracts if cash contracts have gotten so low, and the wide cash-three-month spread has maintained instead of narrowing due to the absence of forward selling," a trader said.
