According to foreign news on April 12, six sources directly involved in pricing negotiations said that Japan's aluminum premium in the second quarter was finalized at $145-148 / ton, up 61-64% from the first quarter, affected by the tightening of Asian supply.
The aluminum premium in the second quarter was much higher than the $90 / ton in the first quarter and hit the highest level in nearly two years, but at the lower end of the $145-155 / ton initially quoted by producers.
Japan is a major aluminum importer in Asia, and the quarterly primary aluminum LME spot aluminum premium is seen as a regional price benchmark.
Quarterly pricing negotiations between the Japanese buyers and global suppliers including Rio Tinto and South32 began in late February.
"The rise in premiums reflects supply constraints across Asia except Japan, while demand from China and South Korea is particularly strong," said a source at an aluminium producer.
The Japanese buyer struck a deal with one global producer in mid-March for $145 a tonne, followed by another this month for $148 a tonne, the sources said.
The final agreement took two weeks longer than usual to reach. Some buyers initially balked at the $148 per tonne premium but eventually relented as the second producer highlighted the tightening of supply in the region, the sources said.
Both buyers and sellers believe demand in Japan's construction and non-auto sectors remains subdued, the sources said.
"Domestic demand is still weak and external factors have sent premiums soaring," said a source at a trading house.
After plunging 26% in 2023, Japan's imports of primary aluminum ingots rose 4.4% in the first two months of this year.
According to Marubeni, aluminum inventories at Japan's three major ports stood at 330,900 tons in February, higher than the healthy range of 250-300,000 tons.
