Japanese buyers agree to pay a 13% lower aluminium premium in Q1 than in Q4

On December 28, 2022, four industry experts involved in the pricing discussions informed that some Japanese aluminium buyers agreed to pay global producers a premium of $86 per tonne over the benchmark price for January-March shipments, down 13% from the current quarter.

The amount is less than the $99 per tonne paid in the quarter between October and December. The premium is at its lowest level since the quarter from October to December 2020, marking the fifth consecutive quarterly reduction.

The premiums set the benchmark for the region for primary metal shipments that Japan, Asia's largest importer of light metal, agrees to pay over the London Metal Exchange (LME) cash price each quarter.

Our source from the Japanese trading house said, "We have done the deals at $86 a tonne with two producers on December 27, 2022. We wanted to settle for the low $80s, but we compromised because we were going into the New Year holiday."

However, another source at the producer end stated that the company had reached an agreement with multiple buyers at $86 per tonne as of December 28, 2022. Despite it, discussions with other buyers could last until early next month.

The quarterly pricing discussions between Japanese customers and international suppliers, such as Rio Tinto Ltd. and South32 Ltd., started in late November and are anticipated to last longer than expected into next month.

The sources said that producers had lowered their offers from an initial $95-$105 per tonne due to weak demand and adequate inventories.

Marubeni Corp reported that aluminium stocks at three major Japanese ports were 378,550 tonnes at the end of November, up from 268,600 tonnes the previous year.