Japanese buyers resist escalation of aluminium shipment premium and agree to pay $127.50/t for Q3

Japanese buyers have reportedly agreed to the premium of $127.50 per tonne for aluminium shipments for the third quarter of 2023, close to $125-130 per tonne range in the previous quarter ended June 30. The premium remains restrained for the September quarter due to ample stocks and sluggish domestic demand.

The premium for Q3 is decided after extensive negotiations whereby producers demanded higher premiums than the previous quarter but buyers sought to cut levels, said the sources directly involved in pricing talks.

The negotiations began in late May between Japanese buyers and global suppliers, including Rio Tinto and South32.

One of the sources even said that some buyers wanted to fix the premium at $110-110 per tonne but ran out of time in negotiations.

Japanese aluminium producers initially asked for higher premium given declining ingot imports and higher premiums overseas. However, eventually, they lowered their offer due to weak demand in construction and automobiles with high inventories.

According to Marubeni Corp, major Japanese integrated trading and investment business conglomerate, aluminium stocks at three major Japanese ports were found at 357,490 tonnes at the end of June, above the 250,000-300,000 tonnes than the appropriate level.

Japan’s aluminium ingot import declined in the first six months of the year by 32 per cent from a year earlier, found the trade data.

From Russia, the import plunged by 59 per cent as many Japanese companies reduced purchases from the country after Moscow’s invasion of Ukraine.