Global aluminium producers offer $95-105/t premiums to Japanese buyers for 1Q2023

According to a report on Wednesday, December 14, global aluminium producers have proposed premiums of $95-$105 per tonne to Japanese buyers for the metal shipments during the first quarter of 2023. That is 4 per cent less than the current quarter, whilst at the same time, 6 per cent higher, as reported by three sources directly involved in quarterly pricing talks.

Japan is Asia’s biggest importer of primary aluminium, and the premiums it agrees to pay for the metal each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

For the current quarter ending December 31, Japanese buyers pay a premium of $99 per tonne, 33 per cent less than $148 per tonne in Q3 and 42 per cent shorter than $172 per tonne in Q2 2022.

The price negotiation for Q1 2023 began last month between Japanese buyers and global producers, including Rio Tinto Ltd and South32 Ltd, are expected to continue until late this month. Initial offers were made earlier this month, sources said.

"Japanese buyers are demanding even lower levels due to slack demand and higher inventories,” commented a Japanese rolling manufacturer, adding that there were some spot deals with premiums between $70-$80/tonne recently.

 Aluminium stocks at three major Japanese ports were 377,200 tonnes at the end of October 2022, compared to 287,100 tonnes a year earlier, according to Marubeni Corp.

"The negotiations may drag on as consumers and producers diverge on the demand outlook," a source at a trading house said.