Spot premiums were quoted in Taiwan at $65-$70 a tonne, up from $60-$65 a week ago, besides the $40-$45 range just a month ago. Traders said recent international price rises and increasingly tight supply have squeezed the local market hard, forcing the spot premiums to surge rapidly. "You can't imagine how tight the supply is. If you have no connections, you can't even get a price quotation," said an executive of a Japanese metal company who is based in Taipei.

Traders said shipments to Asia had fallen sharply in 1999 as suppliers, adjusting to weak demand from recession-hit Asia in 1997-98, stepped up deliveries to the United States and Europe. Rebounding from a trough of around $1,160 in early March, thethree-month aluminium contract ended on Monday at $1,243 in London after nearing $1,300 at one point last week.

"This further adds upward pressure to spot premiums in Taiwan," an executive of a local aluminium company said. A depletion of Asian inventories has prompted Taiwan users to hunt for any available contracts even at higher prices, the second executive said. Inventories already had been squeezed during the worst days of the Asian financial crisis as Asian users largely cut their stocks to save costs, executives said.

Traders nonetheless said the high premiums did not reflect actual Taiwanese demand, which remains relatively unchanged from 1998 as a long-awaited construction recovery has yet to emerge. The demand for aluminium stood at some 3,00,000 tonnes in 1998 and would remain about the same in 1999.

Traders said until the construction industry sees a steady rebound, presumably in the second half as the government's big acceleration of infrastructure spending kicks in, they did not expectdemand to rise sharply. Spot premiums will trend lower by the end of April as fresh shipments return to Asia. "That's the time when previously ordered shipments begin to arrive," traders said.