Top global aluminium producers have offered Japanese buyers premiums of $310 to $325 per metric ton for October-December primary metal shipments, down 18% to 22% from the current quarter, four sources involved in quarterly pricing talks said.
Japan is a major importer of the light metal, and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 serve as the regional benchmark.
For July-September, Japanese buyers had agreed to pay premiums of $395 per ton PREM-ALUM-JP, up 12% to 13% from the prior quarter.
The lower offers for October-December reflect a positive progress report on Middle East production and softer premiums in Europe, a source at a Japanese trading house said.
“While the opening offers were closer to realistic levels than in the previous round, they remained too high given weak spot prices,” another source at a Japanese rolling mill said, adding buyers would seek a level below $300 as Asia supply-demand balances ease, partly due to increasing Indonesian shipments.
Still, aluminium stocks at Japan’s three major ports AL-STK-JPPRT fell to 201,000 tons at the end of July, the lowest since April 2010, according to Marubeni (TYO: 8002).
Concerns over shipment disruptions due to the Iran war, coupled with strong demand for semiconductor-related products in Japan, continue to support the market, a producer source said.
The sources declined to be identified because the talks were private.
Global primary aluminium output fell 1.7% year-on-year in July, with Gulf production down 44%, according to International Aluminium Institute. Two smelters in the Gulf, which account for around 9% of global primary aluminium capacity, came under Iranian attack in March, which also prevented them from shipping metal to export markets via their normal channels.
The quarterly negotiations between Japanese buyers and global producers including Rio Tinto (ASX: RIO) and South32 (ASX: S32) began last week, and are expected to continue through later this month.
(Reporting by Yuka Obayashi in Tokyo and Amy Lv in Shanghai; Editing by Christian Schmollinger and Varun H K)
