The premium for aluminium shipments to Japanese buyers for the second quarter has decreased to $182 per metric ton. This marks a 20% drop from the previous quarter, reflecting persistent weak demand in the domestic market, as reported by six sources involved in pricing discussions. This decline, falling from $228 per ton in January to March, is the first quarterly decrease in five quarters.
Despite this drop, the current premium still trails initial offers made by global producers, which ranged between $245 and $260 per ton. Japan, a significant importer of aluminium in Asia, uses the agreed premiums for primary metal shipments as a benchmark for the region, calculated over the London Metal Exchange (LME) cash price. According to a source from a Japanese rolling mill, the elevated initial offers were influenced by the anticipation that U.S. tariffs would redirect Canadian aluminum from the U.S. to Europe, consequently increasing U.S. prices and impacting supply chains to Asia.
However, the implementation of only uniform tariffs has resulted in minimal changes to material flows, which reflects the softer domestic demand. The tariffs imposed by U.S. President Donald Trump included a 25% levy on steel and aluminium imports effective March 12. Although he suspended tariffs on goods from Canada and Mexico, these exemptions are set to expire on April 2, creating uncertainty in supply dynamics.
Another source from a Japanese trading house noted that global suppliers had to adjust their pricing to align with the local spot premiums, which were around $170 or lower. Demand from the automotive and construction sectors in Japan continues to be sluggish, despite a reported 3.5% decrease in aluminium stocks across three major Japanese ports in February. Quarterly pricing negotiations commenced in late February between Japanese buyers and global suppliers, including major players such as Rio Tinto and South32.
The sensitivity of these discussions has led to sources remaining anonymous.