A major aluminium producer has proposed a 14% hike in premiums for primary aluminium shipments to Japan for the April-June quarter. The suggested premium now stands at $260 per metric ton, compared to $228 in the previous quarter, sources familiar with the negotiations reported. This increase reflects growing uncertainties around supply dynamics in the global aluminium market.
Japan plays a crucial role as one of Asia’s leading importers of aluminium, with its quarterly agreed premiums serving as a benchmark for the broader region. The January-March premium of $228 had already marked the highest rate in nearly a decade, increasing by 30% from the preceding quarter.
The producer’s decision to propose a higher premium stems from concerns over supply redirection. Fresh U.S. tariffs on Canadian aluminium imports could shift supply flows, diverting materials from traditional sources like the Middle East and Australia to North America, thereby tightening availability in the Asian market. The tariff measures, which impose a 25% duty on aluminium and steel imports into the United States, officially came into effect this week. An additional levy on global aluminium imports is expected to take effect in mid-March, adding further pressure to international supply chains.
However, the proposed premium has drawn skepticism from buyers in Japan. Spot premiums in the country remain subdued, hovering around $180 per ton due to weaker demand and efforts to reduce inventories before the fiscal year-end in March. This disconnect may prolong ongoing negotiations, as buyers and sellers work to reconcile their differing expectations. Historically, Japan’s influence in aluminium price-setting has waned, as domestic demand for primary aluminium has nearly halved over the past two decades. Global producers now prioritize larger-volume buyers, reducing Japan’s leverage in negotiations.