TOKYO (Reuters) – The premium for Japanese aluminium shipments for the fourth quarter was set at $97 per metric ton, down 24% from the prior quarter, as demand remained dull at home and abroad, five sources directly involved in pricing talks said
The figure is lower than the $127.5 per ton paid in July–September and the lowest since the January–March quarter of this year. Producers had originally sought premiums of $110 to $120 per ton for the fourth quarter.
Japan is Asia’s biggest importer of light metal, and the premium for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price sets the benchmark for the region.
The results reflected languid demand and ample stockpiles in Japan, while weaker U.S. and European premiums also encouraged some buyers’ aggressive attitude toward negotiations, a source at a trading house said.
Some Japanese buyers agreed last week to pay a premium of $97 per ton.
Buyers had earlier insisted on $90-$95 due to even lower spot premiums, but they compromised to end the negotiations faster than the last three rounds when the talks had dragged on for more than a month longer than usual, another source at a Japanese end-user said.
The quarterly talks began in late August between Japanese buyers and global suppliers, including Rio Tinto and South32.
“Demand from automakers is recovering with the easing of chip scarcity, but appetite from other sectors such as construction stayed dull,” a third source at a global producer said.
Japan’s shipment of aluminum sheets and extrusions fell 4.6% in August, marking the 18th consecutive month of decline, data from the Japan Aluminium Association shows.
Amplifying oversupply concerns, aluminum stocks at three major Japanese ports totaled 360,700 tons in August, exceeding 250,000–300,000 tons that are considered healthy, according to Marubeni.
The high stockpiles came despite a 30% year-on-year cut in Japan’s import of primary ingots in January–August, with those from Russia plunging by 65%, the trade data shows. Many Japanese companies have cut purchases of Russian supplies after Moscow’s invasion of Ukraine.
The sources declined to be identified because of the sensitivity of the discussions.
(Reporting by Yuka Obayashi; Editing by Jamie Freed and Tom Hogue)
By Yuka Obayashi