Japanese Q4 aluminum premium hits 2024 high on tight supply

The fourth-quarter premium for imported primary aluminum to Japan reached a 2024 high Oct. 7 on tight supply despite low demand, S&P Global Commodity Insights data showed.

Platts assessed the Q4 premium for imported primary aluminum at $175/mt plus London Metal Exchange cash, CIF main Japanese ports, Oct. 7, up 1.7% from $172/mt in the third quarter, making Q4 premiums the highest so far in 2024. The level also reflected an 80.4% increase from $97/mt in Q4 2023, according to Commodity Insights data.

The Q4 assessment was based on 10 reported trades from Oct. 2 to Oct. 7. All deals were concluded at $175/mt with a total minimum volume of 17,000 mt/month, plus LME cash, CIF Japan for seaborne P1020/P1020/A ingot loading over October to December.

Offers ranged $175-$200/mt CIF throughout the negotiations.

At the earlier stages of negotiation, participants had expected the Q4 premiums to settle below Q3 based on past cyclical patterns and generally slower demand toward the end of the year.

Tighter supply throughout Asia in recent months, however, supported premiums for Q4, participants said. The recent Press Metal incident(opens in a new tab) further added to the supply tightness, sources added.

Platts specifications are for all quarterly settlements on a CIF main Japanese port basis, negotiated before the quarter between two unaffiliated counterparties, for P1020/P1020A 99.7% primary aluminum ingot, with payment in cash against documents, for volumes of 500 mt/month or more under annual contracts.

In the spot market, Platts assessed the CIF Japan spot premium for 99.7% P1020/P1020A aluminum ingot at $160/mt plus LME cash, CIF Japan, on Oct. 7, up $1/mt on the day.

Platts also assessed the CIF main Asian ports’ spot P1020 aluminum premium at $153/mt plus LME on Oct. 7, unchanged on the day.

Participants have shared that there have been limited interest coming from end-users in both the Japanese and South Korean markets as aluminum demand remains tepid across most of Asia.

“The market would need some time to accept the $175/mt Q4 MJP premiums,” said a trader, adding that “spot premiums have not seen a significant impact from the Q4 premiums due to slow demand.”