Some Japanese aluminium buyers have reached an agreement to pay a premium of $228 per metric ton over the benchmark price for shipments scheduled from January to March. This marks a 30% increase from the current quarter, according to two sources involved in the discussions.
Key Highlights:
Quarterly Increase:
This agreement represents the fourth consecutive quarterly increase and surpasses the $175 per ton paid for the October to December quarter.
It is the highest premium since 2015, although it is slightly below initial producer offers ranging from $230 to $260.
Market Significance:
Japan is a key importer of aluminium in Asia, and the premiums for primary metal shipments set a benchmark for the region.
Ongoing negotiations between other buyers and sellers indicate a dynamic market environment.
Supply Concerns:
The increase in premiums comes amid worries about tighter supply in Asia, particularly after China announced the cancellation of a 13% export tax refund for aluminium semi-manufactured products effective December 1.
This change is expected to elevate ingot demand from Asian rolling mills outside China, with inquiries for primary metal already on the rise.
Global Market Factors:
Strong global alumina prices have led some producers to curtail aluminium output, while civil unrest in Mozambique has further intensified concerns over global supply constraints.
Russian aluminium producer Rusal announced in November that it would reduce output by over 6% due to high alumina prices and a slowdown in domestic demand.
Japanese Market Dynamics:
Despite sluggish domestic demand in Japan, one source noted that the settled premium of $228 reflects concerns over overseas supply risks and the potential for extended negotiations to drive prices higher.