Japanese aluminium buyers agree to pay $90/t premium for Q1 2024 shipment

Japanese aluminium buyers have reportedly agreed to pay global producers a shipment premium of $90 per tonne over the LME benchmark price for the March quarter of 2024.

The news came on December 28 after three sources directly involved in the pricing talks revealed. Compared to the current quarter till December 31, 2023, the premium agreed upon for Q1 2024 is 7 per cent lower.

The premium is even less than a global aluminium producer's initial offering of $95 per tonne. 

Japan is Asia's major importer of aluminium; thus, the premium it pays for shipment each quarter sets a benchmark for the region.

The Q1 2024 pricing negotiations between Japanese buyers and global suppliers, including Rio Tinto and South32, started late last month. While one producer lowered its offer to $92 per tonne, another raised its offer to $97 per tonne, said the sources.

"But we have settled with two producers at $90 as one producer came further down, taking a deeper consideration of our request for the $80-$89 range amid slow domestic demand and inventory buildup," a source at a Japanese rolling mill said.

"Another producer also made a compromise later as both sides wanted to finish the talks by the end of this quarter," he added.

In November 2023, aluminium stocks at three major Japanese ports shrank 3.3 per cent from a month earlier to 330,000 tonnes but at least stood higher than the 250,000-300,000 tonnes level that is considered healthy.

According to the Japan Aluminium Association, Japan's aluminium sheets and extrusions shipment fell 5.1 per cent year-on-year in November 2023, indicating the 21st consecutive month of decline.