London 15/03/2016 - Stocks of aluminium at major Japanese ports (MJP) continued to drop in February, albeit at a slower pace than in previous months, according to data from trading house Marubeni Corp.
Aluminium stocks in the ports of Yokohama, Nagoya and Osaka dropped just 0.67 percent in February or 2,500 tonnes from January's 368,100 tonnes to 365,600 tonnes in February to their lowest since October 2014.
Still, stocks are down nearly 20 percent from the 453,400 tonnes that were held at the ports a year ago. February and March are also usually quieter months, with the end of the financial year in Japan coming at the end of March.
February's figure also represents a continuation of the trend in place since mid-2015, with stocks in the country's major ports falling steadily from all-time highs in May above 500,000 tonnes.
The continued downward trend in stocks will concern some market participants, however, particularly with negotiations for the supply of ingots for the second quarter taking place.
The drop in aluminium stocks at the three ports in December and January was half the size of the falls in October and November when more than 72,000 tonnes were removed. That slowing continued last month.
Stocks dropped 10,600 tonnes in Yokohama to 192,800 tonnes while stocks in Nagoya increased 8,100 tonnes to 157,800 tonnes. Osaka inventories remained stable at 15,000 tonnes.
December's figure was the first time since November 2014 that port stocks have dipped below the 400,000-tonne mark. Japan is one of the world's largest consumers of aluminium, meeting its 1.7 million tonnes of annual consumption almost exclusively via imports.
Aluminium ingot premiums for delivery in the first quarter of 2016 settled at $110 per tonne cost, insurance and freight (CIF) MJP over LME prices, a 22-percent increase on the previous quarter.
Buyers are said to be holding out for a rollover of the first quarter's premium of $110 in the second quarter or, at worst, a $5-10 increase to $115-120. Producers, however, offered a premium of $125-130 per tonne last week, up 18 percent on the first-quarter benchmark settlement.
Spot premiums for aluminium in Japan were last assessed by FastMarkets at $110-115 per tonne CIF MJP.
(Editing by Mark Shaw)