Global aluminium producers seek Q2 premium from Japan buyers
Business
Global aluminium producers seek Q2 premium of $245-$260/T from Japan buyers
TOKYO (Reuters) - Global aluminium producers have sought premiums of $245-$260 per metric ton from Japanese buyers for April-June primary metal shipments, up 7%-14% from the current quarter, four sources directly involved in pricing talks said this week.
Japan is a major Asian importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange cash price set the benchmark for the region.
For the January-March quarter, Japanese buyers agreed to pay a premium of $228 per ton, the highest in nearly a decade and up 30% from the prior quarter.
The increase in proposed premiums reflected concerns that fresh U.S. tariffs on Canadian aluminium could divert supply from the Middle East, Australia or other regions that typically serve Asia to North America, tightening availability in Asia, a source at a Japanese trading house said.
U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday. Trump also announced plans last month to impose 25% tariffs on all steel and aluminium imports into the United States, effective from March 12.
"The jump in the offer was surprising as spot premiums in Japan hover around $180 per ton due to sluggish demand and efforts to reduce inventories by the fiscal year-end in March," the source said, adding that the talks might drag on due to the wide gap between buyer and supplier expectations.
The last round of quarterly negotiations took about a month longer than usual to conclude.
"After a producer offered $260, another supplier offered $245. However, both are too high as the spot is below $200," said a source at a Japanese rolling mill.
Japan's influence in the price negotiations has waned as primary aluminium imports have nearly halved over the past two decades amid weakening domestic demand, causing producers to prioritise the interests of higher-volume buyers.
