On Wednesday, September 2nd, four industry insiders involved in the quarterly pricing negotiations said that the premium for primary aluminum delivered from October to December to Japanese buyers, offered by major global aluminum producers, was 310 to 325 US dollars per ton, down 18% to 22% compared to the current quarter.
Japan is the major aluminum importer in Asia, and the quarterly premium that the country is willing to pay over the London Metal Exchange (LME) spot price is regarded as the regional benchmark.
From July to September, Japanese buyers agreed to pay an additional premium of 395 US dollars per ton, up 12% to 13% from the previous quarter.
A person from a Japanese trading company said that the quotations for the period from October to December were lower, reflecting the positive progress in production in the Middle East and the weakening of the European premium.
A person from a Japanese rolling aluminum factory said: "Although the quotations are closer to the actual level than the previous round, given the weak spot price, these quotations are still too high."
He added that as the balance of supply and demand in Asia becomes more relaxed, partly due to the increase in shipments from Indonesia, buyers will seek quotations below 300 US dollars. However, according to data from Marubeni, as of July, the aluminum inventory at the three major ports in Japan dropped to 201,000 tons, reaching the lowest level since April 2010.
A producer said that concerns about the potential disruption in transportation due to the war in Iran, combined with the strong demand for semiconductor-related products in Japan, continue to support the market.
According to the International Aluminum Institute (IAI), global primary aluminum production declined by 1.7% in July, and production in the Gulf region dropped by 44%. Two electrolytic aluminum plants in the Gulf region (accounting for approximately 9% of global primary aluminum capacity) were attacked by Iran in March, which also prevented them from shipping aluminum to export markets through normal channels.
