Q1 2021 MJP aluminium premium settles at $130/t - up nearly 48% from Q4 ’20

Fastmarkets’ premium for the supply of aluminium to main Japanese ports (MJP) in the first quarter of 2021 has settled at $130 per tonne, its highest since the third quarter of 2018.

The latest aluminium P1020A (MJP) quarterly premium, cif Japan is on top of the London Metal Exchange cash price and for January-March delivery. The premium is up 47.7% from $88 per tonne in the fourth quarter of 2020.

The premium is also 56% higher than the first-quarter benchmark for 2020, which settled at $83 per tonne.

The last time the premium settled above $100 per tonne was the third quarter of 2019, at $108 per tonne. The premium settled at $132 per tonne for the third quarter of 2018.

The settlement is in line with Fastmarkets’ methodology, with more than 30,000 tonnes of deals directly reported by at least one side in the trade, including producer, consumer and trader data submitters.

Market participants said the majority of quarterly deals concluded at $130/t, including multiple producer sales. The majority of the market told Fastmarkets that $130 per tonne was reflective of the quarterly negotiations.

Material was first offered to the market at $138 per tonne by two producers, and other offers for the first quarter were heard at $140 per tonne.

There were some sales by a trader reported to Fastmarkets at $125 per tonne.

The open Chinese arbitrage window and higher premiums across Asia added competition for supply in Japan. Fastmarkets’ aluminium P1020A premium, cif Shanghai was assessed at $110-130 per tonne on Tuesday December 29, up from $90-110 per tonne at the end of October.

Buyers in Japan needed to purchase fewer tonnes to replenish cargoes than in previous quarters due to the Covid-19 pandemic damaging demand, but market participants said demand has recovered.

Higher freight rates and limited availability of containers are also supporting a higher premium.

Aluminium spot premiums in Japan edged higher for similar reasons - supported by first-quarter deals concluded at $130 per tonne. Primary aluminium stocks at the three main Japanese ports of Osaka, Nagoya and Yokohama fell by 20.9% year on year at the end of November.

Fastmarkets assessed the aluminium P1020A (MJP) spot premium, cif Japan at $120-130 per tonne on December 29, up from $100-110 per tonne at the beginning of December.

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