Aluminium giant seeks 14% premium hike in Q2, a surging trend set owing to trade and supply concerns

A leading global aluminium manufacturing giant has recently sought a premium of USD 260 per tonne from Japanese buyers for April-June (Q2) primary metal shipments, which is a notable 14 per cent increase from the current quarter (Q1, 2025). This development is nothing but a ripple effect of the persistent volatility in the primary metals market, a simultaneous event along with geopolitical tensions and production constraints continuing to reshape global supply chains.

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Japan, a major importer of aluminium in Asia, plays a pivotal role in regional price formation. The premiums for primary metal shipments are determined quarterly over the London Metal Exchange cash price (CMAL0), a benchmark that reflects prevailing market conditions.

Japanese buyers had agreed to a premium of USD 228 per tonne in the preceding January-March quarter, the highest in nearly a decade and up 30 per cent from the previous quarter. This marked escalation has been attributed to several converging factors.

According to the insights from S&P Global’s Platts research and analysis wing, the premium surge in the first quarter of 2025, which averaged USD 228 per tonne, is primarily due to the limited availability of primary metal. Production cuts, largely due to high alumina prices in the second half of 2024 that peaked at a historic USD 805 per tonne on December 4, have exacerbated the scarcity.

These production adjustments have forced market participants to accept higher premiums to secure supply in an increasingly constrained environment.

The situation has been further complicated by fresh US tariffs on Canadian aluminium. Introduced by President Donald Trump, these tariffs are feared to divert supply from traditional exporters — such as the Middle East, Australia, and other regions that typically serve Asia — to the North American market. This potential redirection will likely tighten supply further in Asia, raising concerns among Japanese traders.

One source at a Japanese trading house explained the market’s reaction, “The jump in the offer was surprising as spot premiums in Japan hover around USD 180 per tonne due to sluggish demand and efforts to reduce inventories by the fiscal year-end in March” adding that the talks might drag on due to the wide gap between buyer and supplier expectations.