According to foreign media reports on May 29th, a global aluminum producer has quoted $175 per ton for aluminum premium to be shipped to Japan in the third quarter of this year, which is 18-21% higher than the price in the second quarter. This soaring quotation undoubtedly reveals the current supply-demand tension facing the global aluminum market.
Aluminum premium, as the difference between aluminum price and benchmark price, is usually regarded as a barometer of market supply and demand. In the second quarter of this year, Japanese buyers have agreed to pay a premium of $145 to $148 per ton of aluminum, which has increased compared to the previous quarter. But as we enter the third quarter, the surge in aluminum premium prices is even more remarkable, indicating that the supply tension in the aluminum market is constantly intensifying.
The root cause of this tense situation lies in the supply-demand imbalance in the global aluminum market. On the one hand, the continuous increase in aluminum consumption demand in the European region has led to global aluminum producers turning to the European market, thereby reducing aluminum supply in the Asian region. This regional supply transfer has exacerbated the aluminum supply shortage in the Asian region, especially in the Japanese market.
On the other hand, the aluminum premium in North America is significantly higher than that in Asia, which further highlights the imbalance in the global aluminum market supply. This imbalance is not only reflected in the region, but also on a global scale. With the recovery of the global economy, the demand for aluminum is gradually increasing, but the supply has not kept up in a timely manner, leading to a sustained increase in aluminum prices.
Despite the tight supply in the global aluminum market, Japanese aluminum buyers believe that the quotes from overseas aluminum suppliers are too high. This is mainly due to the sluggish demand for aluminum in Japan’s domestic industrial and construction industries, and the relatively abundant domestic aluminum inventory in Japan. Therefore, Japanese aluminum buyers are cautious about the quotes from overseas aluminum suppliers.