Japan: Aluminum premium rises 53% to settle at $130 for Apr-Jun'23

Negotiations between overseas aluminum ingots producers and domestic consumers as well as major trading companies for aluminum premiums to Japan for the April-June 2023 period have been concluded at $130, up 53% ($45) from the previous quarter.

This is the first time in three quarters that the premium has reached triple digits. Some producers have offered $145, and although all negotiations have not been concluded, the settled price is a reference value.

Negotiations for the April-June period are usually decided in March. However, they were prolonged until mid-April due to a divergence in the perception of appropriate prices between producers and consumers.

Producers initially offered $125-$145 in response to the premium increase outside Japan. On the other hand, consumers were resistant to the offer, which surged 71% from the previous quarter due to the expectation that sluggish demand would continue. Consumers wanted to lower the rate. However, producers did not comply, resulting in a stalemate.

Coastal inventories at Yokohama, Nagoya and Osaka, which indicated domestic supply and demand, were about 370,000 tonnes (t) as of end-March. Due to declining demand and inventory adjustments, the level has remained high in the 300,000 t range for the past year.

A trading company source said of the $130 premium: "The market expected it to be higher than the previous quarter and this time producers did not soften their stance, as we saw a temporary offer of $150 from producers. There are still producers who are giving estimates, so there is a lot of interest as to whether it will converge at $130."

Note: This article has been published in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.