Aluminium Premium Proposal To Japan Rises 14% Amid Supply Concerns

A major global aluminium producer has proposed a $260 per metric ton premium for primary metal shipments to Japanese buyers for the April-June quarter, marking a 14% increase from the current quarter, according to two sources involved in the pricing talks.

Japan, a key Asian importer of aluminium, uses the premiums it agrees to pay over the London Metal Exchange (LME) cash price as a regional benchmark for pricing. For the January-March quarter, Japanese buyers accepted a premium of $228 per ton, the highest in nearly a decade, representing a 30% rise from the previous quarter.

The proposed premium hike comes amid concerns that new U.S. tariffs on Canadian aluminium could disrupt supply chains, diverting aluminium from the Middle East, Australia, and other regions typically serving Asia to North America. This shift is expected to tighten availability in Asia, said a source from a Japanese trading house.

The new 25% tariffs on imports from Mexico and Canada, which took effect on Tuesday, add to President Donald Trump’s recent plans to impose similar tariffs on all steel and aluminium imports into the U.S., effective March 12.

While the proposed premium increase is substantial, it comes as a surprise given that spot premiums in Japan are hovering around $180 per ton, driven by sluggish demand and efforts to reduce inventories ahead of Japan’s fiscal year-end in March. The source noted that the wide gap between buyer and supplier expectations could lead to extended negotiations, with talks from the previous quarter taking about a month longer than usual to conclude.

Due to the sensitivity of the discussions, the sources declined to be named.

Over the past two decades, Japan’s influence in aluminium price negotiations has diminished, with primary aluminium imports nearly halving as domestic demand weakens. This has shifted the focus of producers toward higher-volume buyers, rather than prioritizing Japan’s interests.