The first deals on first-quarter shipments of aluminium to Japan have been settled at $77-78 per tonne over LME cash, according to Platts.
That marks a retreat from premiums of $82-83 in the current quarter and is the first quarter-on-quarter decline since the first quarter of this year.
As ever, there will be further negotiations with some Japanese players looking to get slightly better deals but the negotiations have been fairly speedy this time around after Western producers got the ball rolling with offers of $80 per tonne.
The sharp slide in US premiums—which we looked at in yesterday's MI—set the backdrop for lower cif Japan levels going into next year. Events in Europe, where premiums have soared in recent weeks, have been less relevant to physical business in the Asia region.
Japanese players still view current local port stock levels as too high, even if they have been engineered lower over the course of this year, and although the most recent figures suggest some improvement in mill shipments—a proxy for demand—it has been a highly modest pick-up.
Demand in the country was negatively impacted by poor weather over the summer period, which had a knock-on effect on sales in the key beverage can sector.
Nor do Japanese buyers appear to have been overly impressed by the argument that premiums should reflect an expected slowing of primary metal exports from China after the recent hike in the export duty to 15%.
Chinese exports to Japan have fallen steadily since the start of 2005 and the most recent figures show cumulative exports down 31.5% year-on-year at 115,000t in Jan-Oct. That has made China a far less significant source of metal with Japanese buyers saying they are increasingly looking to Russia to pick up the slack.