How will the P1020A Premium (QMJP) CIF Japan price evolve in Q1 2026?

Q1 2026 Japan MJP (main ports) aluminium ingot premium is expected to rebound from the low of USD 86 per tonne in Q4 2025, with the centre rising. The core logic stems from tightening supply in Asia triggered by the restructuring of global aluminium trade flows, coupled with catalysts from European carbon policies and structural demand support. The latest offers from leading smelters have already indicated an upward trend, but restocking constraints due to the end of Japan's fiscal year may limit the extent of the rebound. Detailed analysis is as follows:

Image credit: SMM

Core driver: Restructuring of global supply chains, widening supply gap in Asia

Arbitrage windows between regions have opened, accelerating the flow of aluminium ingots to European and US markets.

Since Q4 2025, global aluminium premiums have shown an extreme divergence pattern of "strong Europe/US, weak Asia": the US Midwest premium after tax exceeded USD 1,940 per tonne, the premium for P1020A aluminium ingots in Rotterdam, Europe, rose to USD 260 per tonne (up 62.5 per cent from early September), while the Japan MJP premium in Q4 was only USD 86 per tonne, and spot premiums in China fell sharply due to the closure of processing trade windows.

Price spreads have driven cross-regional arbitrage, causing Asian aluminium ingot resources to continuously flow to Europe and the US, directly leading to a contraction in import supply in Asia.

By December 2025, aluminium inventory in China's bonded zones had decreased by 50 per cent from the year's high, and LME inventories in Asia were also at low levels, laying the foundation for a rebound in MJP premiums.

Disruptions in overseas smelting capacity intensify expectations of tight supply

Supply-side disruptions have further amplified the global gap: an unexpected shutdown and production cut at a smelter in Iceland, and the risk of closure at an aluminium smelter under South32, both directly affecting effective aluminium ingot capacity in Europe and globally.

For the Japanese market, which relies heavily on imports (import dependency over 90 per cent), global capacity contraction and shifts in trade flows have created a combined effect, continuously heating up expectations of tight domestic supply, which forms the core logic supporting the rise in premiums.

European carbon policy catalyses early stockpiling, indirectly boosting Asian premiums

With the imminent implementation of the EU Carbon Border Adjustment Mechanism (CBAM), downstream enterprises have started early stockpiling cycles to avoid future carbon tax costs, directly pushing up aluminium premiums in Europe.

This trend not only locks in part of the global aluminium ingot resources but also triggers restocking anxiety among Asian importers, creating a spillover effect that drives up global premiums. Demand Support: Structural Rigid Demand Underpins the Market, Spot Market Has Already Started to Recover

Marginal improvement in traditional industry demand, seasonal factors aid recovery

Demand from the construction and automotive sectors, which weighed on premiums in Q4 2025, is expected to see a marginal recovery. In the construction sector, Q1 is the traditional period for new project initiations in Japan's construction industry, leading to a seasonal rebound in rigid demand for aluminium products (such as doors, windows, and curtain walls). Although the overall recovery pace of Japan's automotive industry remains gradual, the rigid demand for aluminium consumption persists due to the lightweight trend in NEVs, together providing a floor for demand.

Spot market reacts first, clear signals of price increase

The spot market has already anticipated the upward trend in advance: the SMM Japan MJP spot premium has risen to USD 130 per tonne, up 85 per cent from the low at the end of October. At Port Klang, Malaysia, a key transshipment hub for aluminium ingots in Asia, the FCA transaction price range reached USD 130-135 per tonne.

From a trade logic perspective, the USD 130 per tonne FCA price at Port Klang, plus USD 20 per tonne FOB charges and USD 12 per tonne shipping costs, corresponds to approximately USD 162 per tonne in major Asian regions, significantly higher than the Q4 2025 settlement price, providing a direct reference for the rebound in Q1 2026 premiums. (However, in practice, due to different final cargo flows, the FCA transaction premium in Malaysia serves only as a directional guide under profit orientation.)

Smelters' offers have risen significantly, and negotiation dynamics have shifted to the sellers

In December 2025, two major aluminium smelters had already submitted offers of USD 190 per tonne and USD 203 per tonne for aluminium ingots to be shipped to Japan in Q1 2026, up 48 per cent-49 per cent QoQ from the Q4 2025 offer range of USD 98-103 per tonne. The significant increase in offers reflects both cost and tight supply expectations on the supply side, and indicates that the market negotiation dynamics have shifted from buyer-dominated in Q4 2025 to seller-dominated in Q1 2026, further confirming the certainty of the premium increase.

Risk warning: Fiscal year-end constraints on stockpiling may limit rebound magnitude

It is important to note that the end of March 2026 marks the fiscal year-end for Japanese enterprises. Affected by annual budget controls, the stockpiling scale of some Japanese enterprises may be suppressed, constraining the magnitude of the premium increase in the short term. Currently, the LME near-month contract structure is at CUSD 26.68 per tonne.

With low holding pressure and market expectations for an MJP rebound, most suppliers are holding back cargoes, awaiting the finalisation of Q1 premiums next year. Focus on the restocking intensity after Japan's fiscal year-end, changes in global smelting capacity, and the implementation pace of Europe's carbon policies, as these factors will determine the specific magnitude and sustainability of the rebound.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.