Next year’s aluminium premiums in Japan will likely fall in the US$125 to US$148 range, but Russian supplies of the metal will continue to be a wild card in 2023. Such was the prediction by Japanese trading house Sumitomo Corp last week.
Currently the premiums for the third quarter are US$148 per metric ton above the aluminium price settled on by the London Metal Exchange (LME). Premiums fell from US$172 in the second quarter and US$177 in the first quarter thanks largely to tepid demand in the automotive sector and a jump in local inventory.
“Japanese premiums will likely drop further next quarter amid concerns over a global recession,” opined Sumitomo’s Yasushi Miyachi to Reuters last week.
“The premiums are expected to stay in a range of $125-$175 a tonne next year, with (the) market focusing on the flow of Russian metals.”
Russian aluminium smelters were Japan’s second-biggest suppliers last year, accounting for nearly one-fifth of all primary aluminium imported last year.
Sumitomo went on to predict that aluminium prices would fall between US$2,300 and US$2,700 for the remainder of the year and between US$2,400 and US$3,000 in 2023. Currently the price per ton is at around US$2,400 after peaking at US$4,073 in the spring.
The trader also forecast that the aluminium market would have a surplus of 412 thousand metric tons this year, expanding to up to 125 thousand metric tons next year.
According to Miyachi, energy prices will push the cost of producing aluminium in the coming year.
“Higher smelting costs to reflect soaring energy prices will support aluminium prices, but a potential slowdown in demand due to tightening monetary policy around the world will cap gains.”
“Unless something happens on the supply side, such as a major cut in smelters’ production or a sudden disruption in Russian supply, the metal prices will trade in the range,” he concluded.