Japanese buyers agrees to pay $172/t premium for aluminum imports in Q2'22

• Premiums fall for the second consecutive quarter
  
  
• Offers lower by initial offers of $195-$250/t made by producers
  
  
• Asian primary aluminium supplies to get tighter on low inventory
  
  

The premium for aluminium shipments to Japanese buyers for April-June 2022 was set at $172/t, down 2.8% from the previous quarter, as weak demand in Japan and China outweighed concerns of supply disruptions from Russia, as per Japan Metal Daily.

The premium is lower compared to $177/t paid in the January-March 2022 quarter, marking a second consecutive quarterly drop. It is also lower than initial offers of $195/t-$250/t made by producers.

The negotiations for this term could not be settled by the end of March 2022 due to the discrepancy between prices of producers and consumers.

It is important to mention that Japan is Asia's biggest aluminium importer and the premiums, it agrees to pay each quarter for primary metal shipments, are set based on the benchmark London Metal Exchange (LME) cash price.

Japanese trading house, said "the decline in premiums reflected weak demand from the automobile sector as it deals with a chip shortage. Also, tight container market and high freight rates also made it difficult for the metal to be shipped from Asia to Europe or North America where premiums are much higher".

China is increasing exports of aluminium to fill a widening supply gap in the western markets. "The country shipped around 26,378 t of primary aluminium in February, the highest monthly export volumes since 2010. China became a net exporter in February for the first time since November 2019", as per sources.

Global suppliers such as Rio Tinto and South32 began price negotiations with Japanese manufacturers of rolled products in early-March 2022. The talks took longer than usual because of uncertainty about exports from Russia as a result of sanctions following its invasion of Ukraine.

Notably, Russia accounted for 17% of Japan's total imports of primary aluminium ingots in 2021 and 6% of global aluminium supply. Concerns about the impact of disrupted shipments from Russia as well as reduced output because of high power prices drove aluminium prices to a record high of around $4,000/t in early-March 2022.

Image credit- Alcoa

This article has been published under an exchange agreement between SteelMint and Japan Metal Daily.