Japanese aluminium buyers settle on new premium, 30% higher than Q4, but lower than previous offer

As the negotiation continued for Japanese aluminium shipment premiums for the first half of 2025, some buyers have agreed to pay less than what was offered by global producers at the end of November 2024.

According to a Reuters report, the amount agreed upon by Japanese buyers is $228 per tonne, down by 0.87-12 per cent from the previous offered price of $230-260 per tonne.  However, despite the decline, it is the highest premium since 2015 and 30 per cent more than the premium for the ongoing quarter of $175 per tonne.

The latest premium for Q1 2025 has also reflected an increase for the fourth consecutive quarter.

"Although Japanese domestic demand remains sluggish, we settled at $228 due to overseas supply risks and the possibility that prolonged negotiations could push prices even higher," a source at a Japanese end-buyer said.

Negotiations between other buyers and sellers are still going on amid concerns over the tight aluminium supply in Asia after China cancelled a 13 per cent export tax rebate from December 1, 2024. This situation is expected to create a demand-supply gap for Asian rolling mills outside China to produce semi-fabricated products. A source at a global producer already pointed out an increase in inquiries for the primary metal.

There are heightened worries over tight primary aluminium supplies as many producers have reduced output due to strong global alumina prices. For instance, Russian aluminium producer Rusal announced in November that it would cut production by 6 per cent in response to higher operation costs and dampened demand.

 In addition, environmental protection policies in China during the ongoing winter heating season have also regulated many Chinese aluminium producers, especially in Henan, to trim down their output. Last week, Australia's South32 reportedly withdrew its output forecast for its Mozal Aluminium Smelter in Mozambique amid post-election civil unrest.