Japanese Q3 aluminum premium to LME falls to $148/mt

Platts, part of S&P Global Commodity Insights, assessed the third-quarter premium for imported primary aluminum at $148/mt above London Metal Exchange cash, CIF main Japanese ports, on July 5, down 14% from $172/mt in the second quarter as market fundamentals remained weak in Japan.

It marked the third consecutive decrease in Japanese quarterly premiums, reflecting the weak market outlook.

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 Q2 assessment was on the basis of at least 15 concluded settlements at $148/mt plus LME cash CIF Japan for seaborne P1020/P1020A ingot for loading over July to September, for a volume of at least 500 mt/month.

The 15 concluded deals were reported between June 28 and July 4, and the total volume of the trades was a minimum of 19,750 mt/month.

There were also five settlements reported done at $140/mt over June 17-21. The trades were not deemed repeatable by the close of the negotiations, whereby the majority of the deals reported in June to early July were concluded at $148/mt. The total volume of the five trades reported summed up to a minimum of 11,750 mt/month.

The lower premium was mainly attributed to the low demand for aluminum in Japan. Automakers in Japan have been cutting production lines because of the ongoing global semiconductor chip shortage coupled with supply chain disruptions caused by Chinese lockdowns.

In addition, the significant rise in stocks in Japanese ports, coupled with the weakening of the yen against the dollar, have contributed to the waning demand for aluminum.

Meanwhile, Platts CIF Japan spot premium for 99.7% P1020/P1020A aluminum ingot was assessed at $93-$103/mt plus London Metal Exchange cash, CIF Japan, on July 5, unchanged from July 4, according to S&P Global data.