According to foreign news on January 11th, a number of sources directly involved in pricing negotiations said on Friday that the aluminum premium that was shipped to Japan in January-March 2019 was finalized at the lowest level in more than two years, and the spot premium fell due to abundant supply.
According to sources, most of the premiums were finalized at $85 per ton, with a few finalized at $83 and $84.
The new season's premiums fell 17-19% from the previous quarter's $103, the second consecutive quarterly decline, and the lowest since the fourth quarter of 2016.
The final premium was lower than the manufacturer’s earliest reported $91-93 per ton.
Japan is Asia's largest aluminum importer, and Japanese buyers agree to pay a premium on the London Metal Exchange (LME) spot price each quarter, becoming the Asian price indicator.
A Japanese buyer said: "The premium for most agreements was finalized at $85 per ton, but some were finalized at $83."
Another source in the end-user market said that most agreements were reached at $85 per ton, with some premiums at $84.
Three other sources said that the premium for all contracts was set at $85 per ton, and producers compromised, lowering the initial offer, as domestic spot prices rose to near $70-80 per ton.
Economic indicators indicate that the economic growth of China and the United States slowed down at the end of last year, and the US may lift the fear of oversupply caused by the news of Russia's aluminum sanctions, which also caused the decline of the agreement.
On December 20 last year, the US Treasury Department announced that it intends to lift the sanctions on EN +, Rusal and EuroSibEnergo, saying that these companies have implemented enough corporate governance changes to keep a distance from Russian billionaire Oleg Deripaska.
Despite the decline in premiums in the first quarter, many buyers, smelters and traders said that premiums will rebound in April and beyond, as demand will usually rebound.
The quarterly pricing negotiations between Japanese buyers and global producers began at the end of November last year, with negotiating rivals including South32 Ltd, Rio Tinto and Alcoa.