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Japan Q2 Aluminium drops to $182/T due to weak demand, sources

Japan Q2 Aluminium drops to $182/T due to weak demand, sources

Six sources involved in the pricing discussions said that the premium for aluminium shipped to Japanese buyers from April to June is $182 per metric ton. This is a 20% drop compared to the current quarter as domestic demand remains weak.

This is a lower figure than the $228 paid per ton in January-March and marks the first quarterly decrease in five quarters. However, it is still below the initial offers made by global producers of $245-$260 per ton.

Japan is the largest Asian importer for premiums and light metals For primary metal shipments, it agrees to each quarter pay over the benchmark London Metal Exchange cash price that is set as the benchmark for the area.

Sources at Japanese rolling mills said that the aggressive initial offers were made because they expected U.S. Tariffs to push Canadian Aluminium from the U.S. into Europe, increasing the U.S. Premium and redirecting metal headed for Asia to North America.

The source noted that the final agreement reflects the weak domestic demand.

On March 12, U.S. president Donald Trump imposed 25% tariffs on all imports of steel and aluminum into the United States.

He suspended the 25% tariffs that he had imposed in early March on many goods coming from Canada and Mexico. Exemptions for two of the largest U.S. trade partners expire April 2.

Another source from a Japanese trading firm said that global suppliers had to make compromises to match local spot premiums of around $170, or less.

Japan's automakers and construction sector demand remained weak, despite the fact that aluminium stocks were increasing at three major Japanese port cities Marubeni reports that the number of tons produced in February fell by 3.5% from the previous month.

Late February, Japanese buyers and global suppliers including Rio Tinto, South32, began quarterly pricing discussions.

Due to the sensitive nature of the issue, the sources refused to identify themselves.

(source: Reuters)