Officially, trading houses in most major Asian destination cities are quoting premiums of between US$40 and $50 a tonne over the London Metal Exchange (LME) monthly cash average. "But the reality is, is that actual premiums are much lower... maybe $35-37 (a tonne)," a trader in Australia said.

Other traders agreed with the lower estimates, noting that plenty of metal existed on the ground around Asia, anchoring down premiums.

With most Australian-produced aluminium shipped out of South Australian ports, actual premiums vary, with countries such as Thailand and Malaysia probably paying a bit more than other destinations, said another trader.

First quarter 1999 supply contracts currently under negotiation between Australian aluminium producers and Asian customers are expected to reflect further declines in premiums.

In Southeast Asia, traders werereporting stable demand from Indonesian, as well as from India, Pakistan and Bangladesh, reflecting little change in local premiums starting at around $40/tonne.

South Korea's aluminium import premiums for first quarter shipment were expected to come in sharply down from about $52/tonne for fourth quarter shipments, when negotiations wrap up this week, traders said.

South Korea's aluminium ingot imports fell to 452,965 tonnes in the first 10 months of 1998 from 658,886 tonnes in the same period a year ago, data by the Korea Trade Information Services showed.

Taipei metal dealers said Taiwan's aluminium import premium was last quoted at $38/ tonne.

For all of 1998, Taiwan is on track to import 340,000 to 360,000 tonnes of primary aluminium ingots and about 150,000 tonnes of aluminium alloy.

There has been some discussion of a modest increase in premiums for the first quarter of up to five percent, although so far there has been little sign of an accompanying lift in demand to support such a move,traders said.

Premiums CIF Hong Kong, were also around $40/tonne. Traders noted that planned government infrastructure spending in the second half of 1999 could boost demand and lift premiums along the way.