Japanese aluminium market moves toward spot buying

The balance between spot and quarterly aluminium premiums in Japan is shifting toward greater use of spot pricing. Karen Ng reviews the drivers.

Japan, Asia’s largest aluminium importer, is accelerating its shift away from the traditional quarterly benchmark premium system to purchase more units on the spot market and reduce its exposure to price volatility. For years, Japanese end users and "sogo sosha" - large corporations that have big trading arms as well as manufacturing and logistics divisions across Asia - have bought their primary aluminium from overseas suppliers based on a quarterly main Japanese port (MJP) premium paid over the London Metal Exchange cash price. That premium, which is published by Fastmarkets, is negotiated before the end of each quarter for the following three months between end users, producers and the sogo soshas. It serves as the benchmark for aluminium contracts for the whole of Asia, stressing the significant influence that the Japanese market has in the region. Japan imported 1.6 million tonnes of unalloyed aluminium in 2018, up 1.6% from the previous year, according...

Published

Karen Ng

September 09, 2019

11:00 GMT

Singapore