Japan’s Q1 aluminium premiums set at US$95 per tonne

According to sources privy to quarterly pricing talks, premiums for aluminium imported into Japan during the first quarter this year are set at US$95 per ton. The sources, who spoke to Reuters on condition of anonymity, indicated that the rise in spot premiums due to production problems at Alcoa’s smelter in Portland, Australia, prompted the move.

This increase in premiums, which is a 27 per cent increase over last quarter’s premiums, is the first increase in the last three quarters.

“We’ve signed the deals at $95 a ton with four producers,” revealed a source from an aluminium end user.

Another source, this one from an aluminum producer, told the media that all of his firm’s Japanese customers contracted for delivery at US$95 per ton. The talks, which began last month among buyers and producers including Rio Tinto, South32, Alcoa, and Rusal, saw offers of between US$95 and US$110 per ton. Buyers initially set the bar at US$80 per ton, but relented after one of the Portland smelter’s potline was shut down due to damage incurred during a recent power outage.

Trading house Marubeni expected aluminium premiums to stay in a range between US$80 and US$140 per ton in the new year.

“We accepted the $95 as spot premiums have edged higher after the Portland news and local stocks have declined,” explained an anonymous source from a Japanese fabricator.

Japanese stocks at three of its major ports dropped by 13.8 per cent to 239,900 metric tons in November. Inventories have been on the decline since May 2015, when inventories topped 502 thousand metric tons.

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Buyers are looking to move away from annual contracts in favour of shopping on the spot market, explained a source at a Japanese trading company, as premiums on the spot market are lower than they’ve been over the past seven years.

“We’ve cut some amount of annual contracts for 2017 as we want to buy more metals from spot market, which is a global trend,” said the source. He went on to say that some buyers were keeping annual purchase volumes at the same level in order to insure a stable supply.