A trio of sources who spoke to Reuters said that Japanese buyers are settling on premiums of around US$79 per metric ton for aluminium shipments for the third quarter, which represents a drop of 3.7 percent over premiums paid for shipments during the second quarter of this year.
Per the sources, coronavirus bears the guilt for the fall in premiums, which has pulled premiums down from US$82 per metric ton this quarter, marking the fourth consecutive quarterly drop in price. Though offers started as high as US$85 per metric ton from producers, the current asking prices are the lowest since the closing quarter of 2016.
Negotiations for this quarter’s prices began in May and are typically concluded prior to the beginning of the quarter. However, as with most things this year, the current state of the economy prompted negotiations to last longer than normal. Insiders expect more deals to be solidified later this month.
Per a source at an aluminium producer who spoke with Reuters, coronavirus’s effect on the economy has translated to significantly lower demand for aluminium from Japan’s buyers this quarter. In turn, the drop in demand has translated into a corresponding fall in prices.
“But producers were sticking to higher premiums on the back of firmer demand from China and South Korea, where industry activity has picked up earlier than Japan and a recovery in the U.S. premiums,” indicated another source from an unnamed aluminium producer.
“Still, we’ve made a compromise as time was running out,” the source concluded.