The article below is an edited version of an Insight originally written by Chris Lawson. Read the full version here or speak to a CRU expert about market intelligence and analysis relevant to your organisation.
Asian aluminium premiums are under pressure as inventories build and underlying demand remains weak, with expectations for the next quarterly MJP contract already falling.
CRU’s Asia CIF aluminium premium was last assessed at $202/t, well below the MJP Q3 benchmark of $395/t. As Q4 negotiations approach, MJP offers have fallen from opening bids of $325/t in early September to around $245–260/t.
Why are aluminium premiums falling in Asia?
Aluminium premiums across Asia are declining as inventories build and underlying demand remains cautious.
Korea, Malaysia and Taiwan are among the markets feeling the pressure, while premiums in Vietnam and Thailand have held comparatively firm.
The decline is also evident in Indonesia, where the FOB Indonesia LME aluminium premium has fallen sharply since June.
The combination of weaker underlying demand and growing inventories is weighing on premiums across the region. This is creating a more challenging environment for sellers as they approach the next round of contract negotiations.
What does the MJP contract tell us about Asian aluminium premiums?
The latest MJP offers highlight the extent of the pressure facing Asian aluminium premiums.
The MJP Q3 benchmark of $395/t is significantly above current Q4 offers of around $245–260/t. The decline in offers comes as regional spot premiums are also retreating, pointing to a broader deterioration in market conditions rather than a change isolated to one benchmark.
With the fresh MJP contract approaching, the outcome of negotiations will provide an important indication of where Asian aluminium premiums are heading next.
Why are lower Asian premiums making Europe more attractive?
Falling premiums in Asia are making European netbacks more attractive, adding another layer of complexity to global aluminium trade flows.
The relative attractiveness of European netbacks is becoming more important as regional premiums diverge. Producers and traders are therefore assessing where metal can achieve the most favourable returns, despite the longer shipping routes involved in supplying Europe.
European aluminium pricing and global trade flows are also being affected by ongoing disruption to metal moving between regions. This adds further uncertainty to where aluminium is ultimately placed.
What could happen to Asian aluminium premiums next?
Asian aluminium premiums are retreating as inventories build and underlying demand remains weak. The original Insight describes sentiment in Europe as firm for Q4, but a weaker outlook for Asia.
New capacity expected in 2027 is set to reach Asia first, which could add further pressure to regional premiums.
The divergence between Asian and European premiums highlights the importance of understanding regional market conditions and trade economics when assessing aluminium prices.
For buyers, sellers and traders, having a clear view of the premium that reflects their market is increasingly important. CRU provides high-frequency, globally contextualised aluminium premium assessments to support better-informed decisions.
Looking for price references that reflect the market? Speak to a CRU expert about aluminium price assessments and analysis relevant to your business.
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