Japanese Q1 aluminum premium falls to $85/mt

Platts, part of S&P Global Commodity Insights, assessed 2023’s first-quarter premium for imported primary aluminum at $85/mt plus London Metal Exchange cash, CIF main Japanese ports, on Jan. 20, down 14.1% from $99/mt assessed in the fourth quarter of 2022, as poor demand and pessimistic outlook was observed in Japan.

Following the fall in premiums observed in Q1 2023, it marks the fifth consecutive decline in Japanese quarterly premiums, reflecting the persistently weak market fundamentals prevalent in the Japanese aluminum market.

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 frame contracts.

The Q1 assessment was on the basis of at least nine concluded settlements at $85/mt plus LME cash CIF Japan for seaborne P1020/P1020A ingot for loading over January to March, concluded between Jan. 19-20. The total volume of 2nine reported deals amounted to a minimum of 12,000 mt/month.

In addition, there were also four settlements reported done at $85/mt between Jan. 19-20, as part of the annual frame contract, which were excluded from the Q1 assessment as the deals did not fulfill S&P Global’s minimum volume requirement of 500 mt/month. The total volume of the four reported settlements amounted to a minimum of 800 mt/month.

The lower Q1 premiums were largely attributed to the slowdown in aluminum demand observed in Japan, as consumers in the country remained cautious about the procurement of the metal as they remained to be overstocked from the previous quarters.

The Q1 settlements being settled after long delay into the Q1 2023 reflected the Japanese end-users’ reluctance in terms of procuring additional volumes.

In addition, the persistently bearish market sentiment in the Japanese market, coupled with the high availability of stocks readily available at the major Japanese ports, had also contributed to the depressed demand and the observed lack of support of premiums in the Japanese aluminum market.

Platts assessed the CIF Japan spot premium for 99.7% P1020/P1020A aluminum ingot at $70-$80/mt plus London Metal Exchange cash, CIF Japan, on Jan. 20, unchanged from Jan. 19.
Source: Platts