Global Aluminium Producers Raise Premiums for Japanese Buyers Amid Supply Concerns

Global aluminium producers have offered Japanese buyers premiums of $230 to $260 per metric ton for primary metal shipments in the January-March quarter, reflecting an increase of 31% to 49% from the current quarter, according to three sources directly involved in the quarterly pricing negotiations. Japan, a key Asian importer of aluminium, plays a significant role in setting the benchmark premiums for the region, as these premiums are added to the London Metal Exchange (LME) cash price.

For the October-December quarter, Japanese buyers agreed to pay a premium of $175 per ton, representing a 1.7% increase from the previous quarter. The new offers from producers—one quoting $230 per ton and another at $260 per ton—are driven by concerns over tightening supply in Asia, particularly after China announced that it would cancel a 13% export tax refund for aluminium semi-manufactured products starting December 1. This policy change is expected to drive up ingot demand from Asian rolling mills outside China to produce semi-finished products, a source from a global producer indicated.

In addition to concerns over supply, the higher premiums reflect rising spot premiums in Japan, which are currently close to $200 per ton. "We were surprised by how strong the offers were, especially the $260 price point," a source from a Japanese trading house commented. Another source at a Japanese rolling mill described the offers as too high, noting that current spot prices are in the $180-$190 range amid sluggish domestic demand.

The quarterly pricing negotiations between Japanese buyers and global suppliers, including major producers like Rio Tinto and South32, began this week and are expected to continue until late next month. Given the sensitivity of the discussions, the sources declined to be identified.