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The premiums that Japanese buyers pay for aluminium are likely to remain at $75-$95 a metric ton in the first quarter of 2024, but gradually rise after that due to tighter supply in Asia and firmer domestic demand, trading house Marubeni said on Tuesday.
Japan is Asia’s top aluminium importer 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.
Japanese premiums have fallen to $97 a tonne this quarter, down 24% from the prior quarter, as demand remains dull at home and abroad.
In the negotiations for January-March primary metal shipments, one global aluminium producer has offered Japanese buyers a premium of $95 per ton, down 2% from the current quarter, to reflect slack demand and high inventories.
Marubeni 8002.T, a major Japanese aluminium trader, predicted the premiums would stay between $75-95 in January-March, but will trade in a range of $90 to $150 for the rest of 2024.
“Japan premiums are expected to climb in later 2024 to reflect tighter supply in Asia due to higher imports from China,” Eisuke Akasaka, general manager at Marubeni’s light metals section, told reporters.
Strong demand growth in India may reduce its exports, limiting substitute supply for Russian metals for which Japan has been trimming since Moscow’s invasion of Ukraine, Akasaka said.
Aluminium prices CMAL3 are currently trading around $2,137 per ton, their lowest in more than three months.
Marubeni forecast an average aluminium price of $2,300 in the first quarter and $2,500 for the rest of 2024 amid healthy global demand in electric vehicles and solar power, and as China is expected to see a supply shortage of nearly 1 million tons as it did this year.