Global aluminium producer slashes premium offer to Japan buyers, say sources
TOKYO: A global aluminium producer has offered Japanese buyers a premium of US$145 per metric ton for July-September primary metal shipments, down 20 per cent from the current quarter, two sources directly involved in quarterly pricing talks said on Thursday.
The lower offer reflects weak sentiment, driven by uncertainty over demand because of US tariffs and increased supply to Asia due to falling overseas premiums, the sources said.
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 (LME) cash price set the benchmark for the region.
For the April-June quarter, Japanese buyers agreed to pay a premium of US$182 per ton
, down 20 per cent from the prior quarter.
"Some buyers are reducing purchases due to the uncertain outlook for automobile production and other demand impacted by US tariffs," a source at an aluminium producer said.
"Meanwhile, some supplies, including those from the Middle East, are shifting from Europe to Asia in response to declining premiums in Europe, easing the supply-demand balance," he added.
Still, buyers see the offer as too high, with the current spot premiums down to US$110-US$120 per ton, according to another source at an end-user.
"There is a gap between the offer and buyers' expectations, which are around the US$100-US$110 level," the source said.
Aluminium stocks at three major Japanese ports rose to 320,300 tons at the end of April, up about 3.40 per cent from the previous month, Marubeni Corp said earlier this month.
The quarterly pricing negotiations began late last week between Japanese buyers and global suppliers, including Rio Tinto and South32, and are expected to continue until later next month.
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