Japanese primary aluminium shipment premium is agreed at $127.5/t for Q3 2023

Japanese primary aluminium premium in the September quarter is less likely to change much from the previous quarter, given a buyer has recently agreed to pay a premium of $127.5 per tonne to a global producer over the benchmark price for shipments, said a source on Tuesday, July 11, involved in the pricing talks.

The offer has been made after several rounds of negotiations whereby producers sought to raise premiums from the earlier quarter, but buyers pushed to cut levels, said a source at a Japanese trading house. 

The amount is close to the premium of $125-130 per tonne paid in the June quarter but lower than the initial offers of $165-180 per tonne made by producers. However, compared to the premium of $95-105 per tonne offered in Q1, the recommended premium for Q3 is higher by over 20 per cent.

Japan is Asia's biggest importer of aluminium, and the premium it agrees to pay each quarter for primary aluminium shipments sets the benchmark for the region.

"We have agreed with a producer to take a middle ground on the both sides," the source said.

"Producers predicted tighter market due to higher overseas premiums, but buyers were not convinced as domestic demand remained weak with ample inventories," he said.

Aluminium stocks at three major Japanese ports were recorded at 354,000 tonnes at the end of May.

The premium offer for Q3 has so far come from only one buyer while many others have not agreed yet as they aim to settle at lower levels of $100-110 per tonne, said another source under anonymous condition.

The pricing talks for Q3 started in late May between Japanese buyers and global suppliers, including Rio Tinto and South32. The negotiations were supposed to end before the beginning of the quarter, but they were carried on for a month longer than usual.