Japan plays a vital role as a major aluminium importer in Asia; with the premiums it negotiates each quarter over the LME cash prices acting as a regional standard. However, it's rare for these negotiations to drag on for several weeks after the start of the quarter.
The quarterly pricing talks between Japanese aluminium buyers and global producers have been dragging on longer than usual. Both parties are struggling to find common ground on primary metal shipments for the October to December period, confirmed by three industry insiders who are part of the discussions.
Clash between the Japanese aluminium buyers and global suppliers
Discussions between Japanese buyers and global suppliers, like Rio Tinto and South32, began in early September. Initially, producers suggested premiums to range between USD 98 and USD 103 per tonne for shipments scheduled between October and December. This represents a decline of about 5 per cent to 9 per cent compared to the levels seen from July to September, which reflects a dip in demand.
One of the producers mentioned earlier decided to drop its offer from USD 103 per tonne down to USD 97, but buyers promptly rejected the offer and are still aiming for premiums to be in the USD 80s and pointing to spot premiums in the USD 70s. Since the USD 97 offer has now lapsed, the producer is gearing up to put together a new proposal. With demand still weak and inventories high, current bids are sticking around the USD 80s.
Also read: Japan’s aluminium market in 2024: Rising imports, falling domestic demand
Japan’s aluminium stock
Aluminium stocks at three major Japanese ports (AL-STK-JPPRT) reached 341,300 tonnes by the end of September, marking a 1.8 per cent increase from the previous month, as reported by Marubeni on Friday.
Sellers are looking to secure higher premiums, as increasing levels in the US and Europe are likely to put pressure on Asian supplies, according to a source from the production side. They also mentioned that negotiations might carry on until the end of the month.
Decline in Q3 2025 premiums in Japan
Japan's aluminium premium for the Q3 2025 has dropped to USD 145 per tonne, down from USD 182 per tonne in the previous quarter. This marks the second straight quarterly decline and the lowest point seen in five years. Weak domestic demand, which has been affected by factors like the US 25 per cent tariff on automotive imports and a 0.9 per cent month-on-month dip in Japan's industrial output in April, contributed to the decline.
On the other hand, high aluminium inventories at major Japanese ports have added more pressure on premiums. Initially, producers were offering premiums ranging from USD 122 to USD 145 per tonne, but buyers pushed back, pointing to low spot deals and high stock levels, eventually agreeing on a price of USD 108 per tonne. This 41 per cent drop from the previous quarter highlights the ongoing uncertainty in demand across key sectors like transportation, construction and packaging.
To know more about the global primary aluminium industry 2025 outlook, read “Global Aluminium Industry Outlook 2025”
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