Japan Q1 aluminium premium more than doubles to $195/T amid fears of tight supply, sources say

ReutersJan 16, 2026 12:10 PM

Q1 premium marks first quarterly rise in a year
Sharp increase reflects fears over tightening supply
It came below second-round offers, but above some initial offers

By Yuka Obayashi

TOKYO, Jan 16 (Reuters) - The premium for aluminium shipments to Japanese buyers for January to March was set at $195 per metric ton, up 127% from the previous quarter, reflecting fears over tightening supply, five sources directly involved in the pricing talks said.

The latest quarterly pricing negotiations began in early December between Japanese buyers and producers including Rio Tinto RIO.AX, RIO.L and South32 S32.AX. Talks typically conclude before the start of the next quarter, but this round extended into the new year due to a wide gap between buyers and sellers, the sources said.

The January-March premium is sharply higher than the $86 per ton paid in the October-December quarter and marks the first quarterly increase in a year. It came below producers' second-round offers of $210-$225 per ton, but above some initial offers of $190-$203 per ton.

Japan is a major Asian importer of the light metal and the premiums PREM-ALUM-JP for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 set the benchmark for the region.

The jump in premium reflects concerns over tighter supply, especially with South32's decision to mothball the Mozal aluminium smelter in Mozambique in March, having failed to secure a power supply agreement with the government, the sources said.

Despite weak demand in Japan, spot premiums have risen to around $170 per ton due to the supply worries, according to a source at a trading house.

"Domestic demand in Japan has been flat over the past year, but with premiums rising overseas and following news of Mozal's production halt, we said we could not ship metal to Asia unless premiums increased," a second source at a producer said.

"Buyers strongly resisted prices in the $200 range, so to avoid prolonged negotiations, we settled in the $190s," the source added.

The sources declined to be identified due to the sensitivity of the matter.

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