Recent negotiations between leading overseas aluminum producers and Japanese companies suggest a reduction in the premium for aluminum ingots in the upcoming quarter, reflecting a slowdown in demand, particularly in the automotive industry.
Sluggish Demand Affecting Aluminum Prices
Major aluminum producers have proposed a premium of $95 per ton for the January-March period of 2024, marking a slight decrease from the previous quarter. This adjustment is attributed to the overall sluggish demand in the market, exacerbated by intermediate inventories.
Inventory Levels and Market Implications
Current domestic port inventories of aluminum ingots in Japan, including major ports like Yokohama, Nagoya, and Osaka, stand at approximately 340,000 tons. A significant reduction in these inventories is anticipated to take about six months, delaying a full-scale recovery in demand until the second half of 2012.
Rolled Aluminum Product Shipments
Data from the Japan Aluminum Association indicates a year-on-year decrease of 1.4% in shipments of rolled aluminum products in October, marking a continuous decline over 20 months. Although there was an uptick in demand for can materials, the market is yet to see a comprehensive recovery.
Quarterly Premium Negotiations
The quarterly premium for aluminum ingots, used in automotive parts and building materials, is a subject of negotiation between Japanese entities and major overseas producers like Rio Tinto. This premium, which is added to the London Metal Exchange (LME) market price, reflects regional supply and demand dynamics. 
