Sources indicate that Rio Tinto has increased its second quarter offer of primary aluminum premiums to Japanese buyers to $350 per ton, up approximately 40% from the previous offer of $250 per ton.
This offer is about 79% higher than the current quarter levels and, if finalized, will be the highest quarterly premium since 2015.
Middle East Conflict Drives Up Costs
Market insiders report that the escalation of the situation in the Middle East has increased the risks associated with shipments through the Strait of Hormuz, thereby inflating freight and insurance costs.
In addition, rising aluminum premiums in European and American markets are affecting the Asian market.
The Middle East accounts for about 9% of global aluminum supply, and the conflict has led to some transport disruptions, raising concerns about tightening supply.
Smelter Production Cuts Intensify Market Tension
Qatalum smelter in Qatar has begun shutting down some of its production facilities.
Meanwhile, Aluminium Bahrain has declared force majeure on some aluminum shipments.
Data shows that about 20% of Japan's primary aluminum imports in 2025 are expected to come from the Middle East.
Asian Premiums Continue to Rise
Market reports indicate that since late February, South Korea's aluminum premiums have increased significantly.
Japan's quarterly premium negotiations are expected to continue until the end of March, and the outcome will have a significant impact on the Asian spot market.
