Global aluminium producers eyeing Q2 premiums at $145-$155/ tonne, industry sources

Aluminium producers worldwide have proposed premiums to Japanese buyers ranging from $145 to $155 per tonne for primary metal shipments from April to June, marking a substantial increase of 61 per cent to 72 per cent compared to the current quarter. This information was disclosed by three sources intimately engaged in the quarterly pricing negotiations on February 29, 2024.

As a significant importer of aluminium in Asia, Japan's agreed premiums for quarterly primary metal shipments over the London Metal Exchange (LME) cash price serve as the standard for the region.

During the January-March quarter, Japanese buyers consented to a $90 per ton premium (PREM-ALUM-JP), marking a 7 per cent decrease from the previous quarter.

This significant reduction coincides with a tightening of supply in Asia due to heightened imports from China despite sluggish local demand in Japan, according to a producer source.

According to a source, delivery supplies for Q2 are commanding a premium of $120 to $130 in other Asian markets, while the spot premium in Japan is experiencing a significant uptick, with recent transactions surpassing $130.

Due to limited supply, Japanese purchasers anticipate a price rise in the upcoming quarter. However, according to another source from an end-user, they consider the proposed increase to be excessively high. The source mentioned that their company is aiming for $115 per tonne. Additionally, a third source from a trading company predicts that the settlement price will likely fall within $120 to $140 per tonne.