The gap between Q3 QMJP offers and actual transaction prices in the Japanese market has widened significantly. At present, the physical spot premium for primary aluminum ingots in Japan stands at USD 395 per metric ton, representing a month-on-month increase of USD 43.5 per ton versus Q2. Nevertheless, overall market sentiment remains bearish, with spot transactions oscillating around the USD 385 per ton mark.
The dual pressures from supply and demand fundamentals constitute the core driver behind the softening spot premium in Japan. On the supply side, market expectations for growing global aluminum supply surplus have intensified steadily. In addition, steady progress has been made in resuming aluminum production capacity in the Middle East, reinforcing expectations of rising overseas supply and capping upward room for spot premiums. On the demand side, Japan has entered its traditional seasonal lull in consumption as scheduled. Downstream end-users have slowed purchasing activity amid sluggish demand, gaining stronger bargaining power and shifting the supply-demand negotiation dynamic firmly in favor of buyers. As a result, the spread between QMJP ingot offers and physical transaction prices in Japan ranges from USD 65 to 70 per ton.
Following the official release of Q3 QMJP pricing, spot offer prices in Japan firmed up temporarily, yet this failed to boost trading volumes, leaving the market locked in a stalemate between bulls and bears. Amid persistent expectations of expanded supply, the temporary firmness in spot prices is projected to give way to corrective declines. The bearish overall trend for Japanese aluminum ingot premiums in Q3 is unlikely to reverse.
In other regional markets, trading activity in the spot aluminum ingot markets of Thailand and South Korea remained extremely muted this week with subdued overall liquidity. In the early week, ahead of the official publication of Q3 QMJP benchmarks, both traders and downstream manufacturers adopted a wait-and-see stance, limiting inventory restocking strictly to immediate operational needs.
After the latest Q3 QMJP prices were released, benchmark levels fell short of pre-market consensus forecasts, prompting sellers across Southeast Asia and South Korea to lift their asking prices. Actual trading data, however, shows downstream buyers in Thailand and South Korea continued to purchase only to cover rigid demand, lacking substantive demand support. Spot premiums and discounts have thus remained range-bound at elevated levels.
In the short term, resuming Middle Eastern smelter capacity and incremental overseas aluminum supply will continue to cap premium upside, compounded by weak seasonal end-user demand that adds further downward pressure to the market. Asian spot aluminum ingot premiums and discounts are therefore expected to maintain divergent, softening momentum, marked by volatile asking prices and persistently thin physical trading volumes in the near term.
