Japan Q4 aluminium premium rises on supply fears amid firmer Europe prices

TOKYO : The premium for aluminium shipments to Japanese buyers for October to December was set at $175 a metric ton, up 1.7 per cent from the prior quarter, on supply concerns amid higher premiums in Europe, four people directly involved in pricing talks said.
The figure is higher than the $172 per ton paid in July to September, and represents a third consecutive quarterly increase and the highest since the January-March quarter in 2022.
Still, it is below initial offers of $180 to $185 per ton made by global producers.
Japan is Asia’s major importer of the light metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange cash price set the benchmark for the region.
“The increase from Q3 reflected producers’ worries over tighter supplies in Asia, as some metals could be diverted to Europe where premiums were higher,” a source at a Japanese aluminium rolling mill said.
Meanwhile aluminium demand in Japan remained sluggish across both industries and construction sectors, with ample inventories, sources said.
Aluminium stocks at three major Japanese ports rose 9.2 per cent month-on-month to 327,300 metric tons by the end of August, trading house Marubeni said last month.
Quarterly pricing talks began in late August between Japanese buyers and global suppliers including Rio Tinto and South32.
In September, negotiations briefly widened the divide between buyers and sellers after one producer hiked its offer to $200 per ton, citing concerns that a fire at a smelter of aluminium group Press Metal in Malaysia could tighten supplies for the region.
But producers made concessions, as the fire’s impact was expected to be limited and as they considered weak local demand and rising inventories, the sources said.
“Japanese companies don’t purchase much metal from Press Metal, so the impact will be limited,” said a source at a Japanese trading firm. Press Metal said last month that about 9 per cent of its total smelting capacity was affected by the fire.
The sources declined to be identified because of the sensitivity of the discussions.