First Q1 aluminum premium contract for Japan settled at US$83/t CIF on Wednesday

According to a Platts report, the first quarterly aluminum premium contract (Jan-March 2020) for Japan for the shipment of 1,000 t/month was settled at US$83/t, plus LME cash settlement average of the shipment month on Wednesday. It was confirmed by a western producer and a major Japanese end user. The quarterly CIF Japan aluminium premiums are negotiated over 10 parties, including three major Western producers and several Japanese consumers and traders.

The premium is 14.4% lower than the Platts Q4 assessment of US$97/t, and close to the US$83-$85/t settled in Q1 2019. Earlier to this report, market participants reported offers of US$92/t, US$95/t and US$85/t by three producers and indicative bids of around US$80-85/t.

A few Japanese traders talked about deals concluding at US$82/t against an US$85/t offer over Monday to Wednesday.

The deal was considered low from a producer's point of view, but Q1 premiums are usually expected to be lower. Traders expected Q2 premiums to be over US$100/t. Other international traders expected Q1 contracts to be closed earlier considering the abundant supply and soft demand in the Japanese primary aluminium market.

The LME aluminium official cash close was settled at US$1,802/t Tuesday. The spread between cash and three months aluminium was in US$8.5/t backwardation as of Tuesday's close. The Platts spot Japanese import premium was assessed at US$75-85/t plus London Metal Exchange cash, CIF Japan on Wednesday.

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