Global producer asks for $110/t aluminium premium from Japanese buyers for Q4 2019

According to the Reuters report, a global aluminium producer has offered Japanese buyers a premium of $110 per tonne for primary metal shipments during October-December quarter. This premium is higher by 2 per cent than that in the current quarter. The news came after five sources directly involved in quarterly pricing said on Friday, August 30.

Japan imports a considerable amount of primary aluminium from Asia and the premiums it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

For July-September quarter, Japanese buyers had agreed to pay a premium of $108 per tonne, up 3 per cent from the previous quarter.

Negotiations on the latest quarterly pricing between Japanese buyers and global producers, including Rio Tinto and South32 Limited, began this week and expected to continue until later next month.

Another increase in premiums would mark the third quarterly increase in a row.

Producer said increase in premiums reflected tighter shipments as some supplies from Australia might continue heading to the United States because of the exemption of 10 per cent import tariffs on aluminium imposed by Washington in March 2018, according to the sources.

However, buyers think the offer is too high as demand in Asia is weakening amid prolonged US-China trade war and there are enough supplies in the region, the sources said.

“We will ask for lower premiums, like between $90 and $100 per tonne, as there are abundant supplies and demand is softening in China and the rest of Asia, including Japan amid a slower economy,” a source at a trading house said.