Global Aluminum Producers Seek Higher Premiums From Japanese Buyers
Global aluminum producers have proposed premiums of $245 to $260 per metric ton for April-June primary metal shipments to Japan, marking a 7% to 14% increase from the previous quarter, according to sources involved in the pricing discussions.
Japan, a key importer of aluminum in Asia, sets a regional benchmark for quarterly premiums over the London Metal Exchange cash price. For the January-March quarter, Japanese buyers agreed to a premium of $228 per ton, the highest in nearly a decade and a 30% increase from the preceding quarter.
The proposed increase reflects concerns that new U.S. tariffs on Canadian aluminum could shift supply from traditional Asian sources such as the Middle East and Australia to North America, tightening availability in Asia. A source at a Japanese trading house noted that the potential supply diversion is a key factor in the higher offers.
The recent 25% tariffs on aluminum imports from Mexico and Canada, implemented by the U.S. government, took effect earlier this week. Additional 25% tariffs on all steel and aluminum imports into the U.S. are set to begin on March 12, further influencing global market dynamics.
Despite the higher offers from producers, spot premiums in Japan remain around $180 per ton due to weak demand and efforts by buyers to reduce inventory before the fiscal year-end in March. A source at a Japanese rolling mill indicated that the gap between supplier expectations and market conditions may prolong negotiations.
Negotiations for the new quarter began late last week between Japanese buyers and global suppliers, including Rio Tinto and South32, and are expected to continue into the coming weeks. The last round of discussions extended about a month longer than usual due to similar pricing disagreements.
