Japan: Aluminium premiums rose by 53% for April-June 2023 to settle at $130

Major trading companies, domestic consumers, and overseas producers of aluminium ingots have agreed on a price of $130, up 53 per cent ($45) from the previous quarter, for aluminium premiums to Japan for the April–June 2023 period.

The premium has reached triple digits for the first time in three quarters. Although all discussions still need to be completed, some manufacturers have offered $145, and the agreed-upon price serves as a benchmark.

Usually, March is the time when negotiations for the April–June season are decided. Due to a difference in how producers and consumers perceived suitable prices, they were postponed until mid-April.

Initial offers from producers in reaction to the premium hike outside of Japan ranged from $125 to 145. The offer, which increased 71 per cent from the prior quarter, was met with resistance from consumers, who believed that the slowdown in demand would continue. Customers wanted the price to go down. Producers, however, refused, leading to a deadlock.

As of the end of March, there were around 370,000 tonnes of coastal inventories at Yokohama, Nagoya, and Osaka, representing domestic supply and demand. The level has stayed high over the past year in the 300,000 tonnes range due to a decline in demand and inventory adjustments.

Regarding the $130 premium, a source from a trading company said,  "The market expected it to be higher than the previous quarter. This time, producers did not soften their stance, as we saw a temporary offer of $150 from producers. There are still producers giving estimates, so there is a lot of interest as to whether it will converge at $130."

                             Received under the content exchange agreement with SteelMint