A global aluminium producer has proposed a premium of $185 per metric ton for primary metal shipments to Japan for the October-December quarter. This represents an 8% increase from the current quarter’s premium of $172 per ton, which was agreed upon for July-September.
Japan is a key importer of aluminium, and the premium set in these negotiations over the London Metal Exchange (LME) cash price establishes a benchmark for the Asian market. The recent proposal comes amid tightening supply in Asia, as some ingots have been redirected to Europe and North America, where premiums are higher.
Despite the tightening supply, demand in Japan remains sluggish. Aluminium inventories at three major Japanese ports dropped to 299,600 metric tons at the end of July, a decrease of about 5.7% from the previous month. However, some sources indicate that the proposed premium may be too high, given current spot prices in Japan, which are in the $160-$170 range.
Negotiations between Japanese buyers and global suppliers, including Rio Tinto and South32, began this week and are expected to continue into next month.