Japan Aluminium Premiums 'Could Go Up' in Second Quarter

The premiums have been firm at  $240-245 per tonne in quiet trading ahead of Chinese New Year, but could rise as demand picks up in Japan.

“The Japanese market and the economic situation should get better and the benefits of the latest stimulus should come through in Q2,” a trader in Tokyo said.

Demand will come from the beverage cans, construction and automobile industry, she added.

“I believe producers will be looking at higher numbers for Japan as they get into the new fiscal year from April,” a major producer source said.

He expects higher demand from construction and auto industries “as with the consumption tax coming in next year, I suppose there will be some last minute purchasing of auto and houses”.

“However, buyers will definitely try to lower premiums,” he said about the second quarter negotiations expected to start towards the end of February.

Elsewhere in Asia, some market participants expect premiums to remain at the same level going forward.

“Producers realise they can ask for a higher number but buyers want it to go down,” a Singapore trader said, adding that “realistically they will probably stay at the same levels”.

It’s been “pretty quiet” lately, a second Singapore trader said.

“Premiums will not be coming down, not softening, but [will] at least maintain [at present levels] as supply is not much,” he added.

Premiums for aluminium ingot in Singapore and Johor LME warehouses were around $175-185 per tonne.