Trading in Japan's domestic spot aluminum has picked up in the last two days on the back of falling London Metal Exchange prices and the stronger yen leading to lower prices, market sources said Thursday.

But some buyers expected a further fall in LME prices on Greece and China issues.

"Half of the customers are buying, half are watching," said a Japanese trader.

Traders said deals in the last two days had closed at Yen 210-220 ($1.75-1.82)/kg ex-warehouse/delivered basis, while prices last week were generally above Yen 220/kg.

The deals were for July-September deliveries of lot sizes ranging from 10 mt to above 100 mt.

A Japanese consumer has awarded a buy tender for around 300 mt of ingot at Yen 215-220/kg ex-main port warehouses, for delivery in July 2016.

The consumer also bought a similar-sized lot for July 2017, traders said. An import premium of Yen 215-220/kg was estimated to be in the range of $80-110/mt plus LME three-month price of $1,660/mt, traders said.

The LME three-months was trading above $1,700/mt a week ago.

Uncertainty over the future of the euro also led to the yen trading at Yen 120 to a dollar Thursday, compared to Yen 122-123 a week ago.

Meanwhile, trading in scrap aluminum has come to a standstill as buyers retreated from the market, traders said.

Secondary aluminum alloy smelters stopped buying scrap from the spot market as the next contract negotiations for H2 July prices are to begin next week and prices were expected to fall, a trader said.

"Sellers want to sell while prices are higher. To a buyer who buys 10 mt, they offer 13 mt, 15 mt," he said.

He has last offered 6063A extrusion scrap at Yen 190-200/kg delivered this week, against counter-bids below Yen 190/kg.

Some secondary smelters were, however, seeking Chinese silicon metal, although deals did not close as buyers expect the yen to strengthen next week.

A source at a Japanese rolling mill that uses both primary aluminum and scrap, expressed concerns over the volatility in currency exchange rates rather than LME price trends.

Primary aluminum producers had enjoyed the benefits of weaker Australian and Russian currencies against the dollar that led to a fall in production costs, the source said.

A producer source said that the stronger yen will hit export margins of Japanese manufacturers and this could affect demand for primary aluminum, another source said.

No deal, bid or offer was reported for spot P1020 primary ingot for prompt loading on Thursday after the contract premiums for Q3 were settled earlier this week.

An Asian trader indicated at $105/mt plus LME cash CIF Japan for P1020-ingot of Australian/Middle Eastern/South African origin, shipped from the smelters within 30 days.

Platts assessed spot Japanese import premiums at $90-$110/mt plus LME cash CIF main Japanese ports Thursday, unchanged from Wednesday, as the $105/mt premium indication was within the range.