Global aluminium producers offer $125-145/t shipment premiums to Japanese buyers for 2Q2023

According to Marubeni Corp, a major Japanese integrated trading and investment business conglomerate, global aluminium producers have mutually agreed to propose $125-145 per tonne of premiums to Japanese buyers for the second quarter of 2023. The news came on March 6 after five sources directly involved in quarterly pricing talks said.

Compared to the premiums agreed upon in the last quarter, proposed premiums for Q2 stand 45-71 per cent higher than $85 per tonne. If Japanese buyers accept the new offer, the premiums will mark the first increase in six quarters and the highest since October-December quarter in 2022.

Global aluminium producers have offered such high premiums considering the possible demand hike from automakers.

Japan is Asia's biggest importer of aluminium and the premiums it agrees to pay for shipments over the London Metal Exchange cash price set the benchmark for the region.

The quarterly pricing negotiations began last week between Japanese buyers like rolling mills and trading houses and global suppliers of aluminium ingots, including Rio Tinto Ltd and South32 Ltd, and are likely to continue until later this month.

One of the global suppliers said the company was looking to raise premiums in line with the growing premiums in the United States, Europe, and Asia, backed on solid demand and tight supply and expectations for car production recovery.

But most Japanese buyers are yet to be convinced of the premiums hike. A source at a Japanese rolling mill said his company was "stunned by the sharp hike" as domestic demand remained weak.

Reflecting sluggish demand, aluminium stocks at three major Japanese ports rose 2.8 per cent to 392,500 tonnes M-o-M at the end of January and 34 per cent higher than a year earlier.