Japanese aluminium buyers are offered an 18-20% higher premium for the September quarter shipments

According to a recent report, Japanese buyers received a premium offer of $175 per tonne from a global producer for the June-September quarter primary metal shipments. The news came after three sources directly involved in quarterly pricing talks reported as anonymous individuals.

The latest offer is 18 to 20 per cent higher than the current quarter’s premium of $145-148 per tonne, which is also 61 to 64 per cent more than the prior quarter's premium of $90 per tonne.

Japan is the most prominent importer of primary aluminium in Asia and thus, the premium it agrees to pay each quarter over the London Metal Exchange price becomes a benchmark for the region.

According to Japanese buyers, this latest premium offer is too high considering the sluggish domestic demand for aluminium, especially from the industrial and construction sectors.

A source said the continuous rise in premiums could be attributed to tighter supply in Asia caused by strong demand from European customers. The source noted that higher premiums in Europe are attracting global producers to send supply to the region. The source added that premiums in North America are also much higher than in Asia.

As a result of ongoing supply constraints, aluminium stocks at three major Japanese ports decreased 2.3 per cent M-o-M and 14.03 per cent Y-o-Y to 308,100 tonnes at the end of April 2024. At Yokohama, the stocks totalled 151,000 tonnes, down by 8.65 per cent Y-o-Y, while the stocks at Nagoya and Osaka amounted to 138,300 tonnes and 18,800 tonnes, down by 19.31 per cent and 13.36 per cent year-on-year.

However, despite the decline across three major ports, the cumulative stocks managed to remain above 300,000 tonnes, which is considered healthy.

Quarterly pricing negotiations began late last week between Japanese buyers and global suppliers, including Rio Tinto and South32, and would expectedly continue until next month.