Aluminium premium negotiations: Producers propose 61-72% increase at $145-$155/t for April to June

Discussions have commenced for the premium on aluminium stacked in Japan for the April to June period, involving overseas producers, domestic consumers, and major trading companies. Producers are proposing a premium of $145-$155/t, marking a 61-72% increase from the previous quarter. If consumers agree to these terms, it will be the first time in three quarters that the premium falls within the $100/t range.

The tightening of domestic supply and demand appears to be influencing producer prices. Combined port inventories (Yokohama, Nagoya, and Osaka) have surpassed 300,000 t since the start of the year, serving as a key indicator for supply and demand. Despite this, a source from a trading company mentioned, "While the figures for port inventories may not fully capture it, the impact of the supply decline is evident."

Apart from the slow domestic demand, the import of aluminum ingots in 2023 recorded a significant 26% y-o-y decline, attributed to the perceived undervaluation of premiums to Japan compared to other regions. Consequently, the utilisation of intermediate inventories held by consumers appears to have advanced.

Furthermore, the relatively lower premium prices in Japan compared to other regions appear to contribute to the rebound. Addressing the forecast for negotiations, a representative from a trading company remarked, "Both producers and consumers anticipate an increase in prices compared to the previous quarter, suggesting that the agreements will probably be reached by the end of the month, as is customary. The outcome will hinge on the extent to which consumers are willing to agree in the future."

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and BigMint