Japanese aluminium premium records fourth consecutive quarterly drop for Q1'24 shipment; 7% decline q-o-q

A few Japanese aluminium buyers have reportedly agreed to a shipment premium of $90/t over the LME benchmark price for the first quarter of 2024 which is 7% lower compared to the current quarter until 31 December, 2023.

Notably, the agreed-upon premium is below a global aluminium producer's initial offer of $95/t. Japan, being a major importer of aluminium in Asia, set a benchmark for the region with the premium it pays for shipments each quarter.

Negotiations between Japanese buyers and global suppliers, including Rio Tinto and South32, began late last month for Q1 2024 pricing. During the negotiations, one producer lowered its offer to $92/t, while another raised its offer to $97/t.

In reaction to slow domestic demand and the build-up of inventory, one producer adjusted its initial offer by approximately $90, considering the suggested range. Following this, another producer later conceded, ultimately concluding the negotiations by the end of the quarter.

In November 2023, aluminum stocks at three major Japanese ports decreased by 3.3% from the previous month to 330,000 t, though still higher than the considered healthy range of 250,000-300,000 t.

Also, the monthly LME stocks observed higher inventories marginally by 0.4% 475,210 t till 28 December, 2023, data maintained by SteelMint showed.

The Japan Aluminium Association reported a 5.1% y-o-y decline in Japan's aluminium sheets and extrusions shipment in November 2023, marking the 21st consecutive month of decline.