The import aluminum premium to Japan for the fourth quarter of 2026 has been set at $255 per ton (CIF), representing a decrease of 35.44% compared to the premium of $395 per ton in the third quarter of 2026. This assessment was made on October 13, 2023, based on 10 transactions conducted from October 7 to October 13.
Transaction Details and Volume
All these transactions were conducted at a price of $255 per ton with a minimum volume of 19,500 tons per month. This volume pertains to P1020/P1020A ingots for loading during the October to December period. Offers during negotiations ranged from $265 to $325 per ton CIF Japan. Specifically, the initial offer for Q4 was $310 per ton CIF on August 28 and reached $325 per ton on September 2. The last recorded offer was $265 per ton, made on October 2, and then expired on October 5.
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Impact of Premium Decrease
The decrease in the aluminum premium in Q4 was significantly different from Q3, where concerns over production disruptions in the Middle East and a shortage of high-quality aluminum had driven seasonal premiums to their highest levels in over a decade. In contrast, Q4 negotiations were influenced by weakness in market fundamentals and expectations of increased regional supply.
As of October 13, the CIF aluminum premium in Japan's spot market has decreased to $237 per ton, representing a decline of 25.94% from $320 per ton on July 1. Additionally, the CIF premium at major Asian ports has also experienced a 39% decrease, reaching $195 per ton.
Some market participants indicated that weak end-user demand was more significant than a lack of buying due to shortage conditions. Many Japanese consumers were well covered by existing supply agreements and therefore did not need to secure additional aluminum before the end of Q4 negotiations.
Moreover, prolonged negotiations led to a "wait-and-see" approach in other parts of Asia, reducing liquidity in the spot market. Some buyers in the broader Asian market still believed that premiums would continue to decrease, which has diminished spot buying incentives.
Furthermore, the backwardation structure of the London Metal Exchange has affected the willingness to hold inventory, with purchases mainly limited to immediate consumption needs. Supply concerns that had dominated earlier this year due to ongoing tensions in the Middle East have gradually diminished.
Emirates Global Aluminum (EGA) announced that the restart of the Al Taweelah aluminum plant, which was damaged by the war, is progressing ahead of schedule in August 2023 at 25% of its nominal capacity of 1.6 million tons per year.
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