News: S32 UPDATE 1-Japan Q2 aluminium premiums set at $145-$148/T, up 61%-64% q/q, sources say

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The premiums for aluminium shipments to Japanese buyers for April to June were set at $145 to $148 per metric ton, up 61% to 64% from the previous quarter, driven by tighter supply in Asia, six sources directly involved in pricing talks said.

The figures were higher than the $90 per ton paid in January to March and mark the highest levels in nearly two years. They fell at the lower end of the initial offers of $145 to $155 made by producers.

Japan is Asia's major importer of the light metal and the premiums PREM-ALUM-JP for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange (LME) cash price CMAL0 set the benchmark for the region.

The quarterly pricing talks began in late February between Japanese buyers and global suppliers, including Rio Tinto RIO.L (RIO) and South32 (S32) .

"The jump reflected constrained supplies across Asia, excluding Japan, with solid demand from China, South Korea among others," a source at an aluminium producer said.

Japanese buyers settled deals with a global producer at $145 a ton in mid-March, followed by agreements with another producer at $148 a ton this month, the sources said, declining to be identified because of the sensitivity of the discussions.

The final agreements took two weeks longer than usual to settle. Some buyers were initially hesitant to commit at $148 a ton, but eventually compromised as the second producer emphasised the tightening supplies in the region, the sources said.

Both buyers and sellers shared a view that Japanese demand from construction and non-automotive industries remains lacklustre, the sources said.

"Domestic demand stayed weak, but the premiums surged due to external factors," a source at a trading house said, citing China's strong appetite for imports.

China's primary aluminium imports rose 214.7% in January-February this year, after increasing 131% for the full year of 2023.

Japan's imports of primary ingots rose 4.4% in the first two months, following a 26% plunge in 2023.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT were at 330,900 tons in February, according to Marubeni 8002.T , higher than the 250,000 to 300,000 tons that are considered healthy.

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TABLE-Japan aluminium buyers agree to pay Q2 premium of 

$145-$148/T amid tight supply in Asia

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