Some Japan buyers agree to pay Q1 aluminum premium of $90/t, down 7% Q/Q

The figure is lower than the $97 per ton paid in the October-December quarter and the initial offers of $95 made by 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 benchmark London Metal Exchange (LME) cash price set the benchmark for the region.

The quarterly pricing negotiations began late last month between Japanese buyers and global suppliers, including Rio Tinto and South32 and are expected to continue until early next month.

Recently, one producer has lowered its offer to $92 while another has raised its offer to $97, according to the sources.

“But we have settled with two producers at $90 as one producer came further down, taking a deeper consideration of our request for the $80-$89 range amid slow domestic demand and inventory buildup,” a source at a Japanese rolling mill said.

“Another producer also made a compromise later as both sides wanted to finish the talks by the end of this quarter,” he said.

Aluminum stocks at three major Japanese ports slipped 3.3% in November from a month earlier to 330,000 metric tons, according to Marubeni. But the level still exceeded the 250,000-300,000 tons that are considered healthy.

The high stockpiles came despite a 27% year-on-year cut in Japan’s import of primary ingots in January-November, with those from Russia plunging by 69%, trade data shows. Many Japanese companies have cut purchases from Russia after Moscow’s invasion of Ukraine.

Reflecting sluggish demand, Japan’s shipment of aluminum sheets and extrusions fell 5.1% in November from a year earlier, marking the 21st consecutive month of decline, data of the Japan Aluminium Association shows.