The pricing negotiations for the fourth quarter of 2025 (October to December) between buyers of Nippon Aluminum and global primary aluminum producers such as Rio Tinto and South 32 are mired in an unusually lengthy game, with significant differences in premium quotes that have yet to reach a consensus. According to three insiders directly involved in the negotiations, the negotiations that started in early September have lasted for over a month, and the price difference between buyers and sellers still exceeds $15/ton. The negotiations are likely to be delayed until the end of October.

As a barometer of the Asian primary aluminum market, the stalemate in Japan’s quarterly premium negotiations reflects the differentiation of the global aluminum trade pattern. At the beginning of the negotiations, based on the sluggish demand in Asia, the manufacturer offered a premium price of $98 to $103 per ton for the Q4 shipping schedule of primary aluminum, which is a decrease of 5% to 9% compared to the $108 per ton in Q3. Afterwards, although one manufacturer slightly lowered its quotation to $97/ton, the quotation quickly expired and failed to push for a breakthrough in negotiations.

The Japanese buyer insists on a lower price range. A representative from a Japanese processing plant bluntly stated that under the dual pressure of weak demand and high inventory, the bargaining of the buyer group is concentrated at over $80/ton, which is significantly different from the manufacturer’s quotation. The quote of $97 has expired, and we have requested the manufacturer to requote, the person added. The weak demand situation in Japan’s domestic automotive and construction industries has not changed. As of the end of May, aluminum inventories in major ports in Japan have increased by 3.34% month on month to 331000 tons, which has left buyers lacking the motivation to accept high prices. It is reported that the 25% tariff imposed by the United States on imported cars has significantly impacted Japan’s automobile exports, indirectly dragging down demand for primary aluminum. As of February 2025, Japan’s primary aluminum imports have decreased by 14% year-on-year.

The manufacturers’ tough stance stems from the “price comparison effect” formed by the continuous surge in premiums in the European and American markets. Data shows that on October 6th, the aluminum premium in the Midwest of the United States hit a record high of $1697 per ton, an increase of up to 250% since January this year. This price fully reflects 50% of the import tariff cost. The European market is also booming, with the premium for taxed aluminum rising by 46% since June and currently reaching $266 per ton. The continuous rise in premiums in the United States and Europe will inevitably lead to the shift of goods originally flowing to Asia towards high premium markets, and Asian supply will become tighter, explained a producer. This regional price difference makes it difficult for sellers to accept buyers’ low price demands.

It is worth noting that the structural differentiation of the global aluminum market further exacerbates the complexity of negotiations. On the one hand, the Asian market is facing pressure from oversupply. New projects such as Kalimantan Aluminum in Indonesia will release a phase of 500000 tons of production capacity before the end of the year. Coupled with the partial return of goods caused by US tariff policies, the loose regional supply pattern is difficult to change. On the other hand, the shortage of non Russian aluminum supply in the European and American markets due to tariff barriers and inventory decline has driven the premium to continue to rise. This pattern of ‘hot in the west and cold in the east’ provides both buyers and sellers with supporting evidence, becoming the core reason for the deadlock in negotiations.

The negotiation deadlock has had a ripple effect on both ends of the industrial chain. For Japanese aluminum processing companies, the uncertain Q4 premium has hindered their raw material cost planning, and some companies have temporarily postponed short-term production plan adjustments; For manufacturers, delayed negotiations may affect the pace of shipments in the fourth quarter, especially in the context of Indonesia’s upcoming release of new production capacity, which could lead to a decrease in shipping efficiency or exacerbate inventory pressure. Citibank previously warned that the base metal market will face challenges in the coming months due to the impact of US tariff policies and weak demand, and aluminum prices may show a neutral to bearish trend.

Industry analysis suggests that in the short term, the focus of the game between the two sides will be on the sustainability of the European and American premium and the recovery signal of Japanese demand. If the premium in the Midwest of the United States remains high, producers may continue to raise prices. If the inventory in Japanese ports continues to rise, buyers will have more bargaining power. The market generally expects the final premium level to be between $85 and $95 per ton, and the outcome of this tug of war will also become an important indicator of the trend of the Asian primary aluminum market in the fourth quarter.