Global aluminum market sounds the alarm! Japan's benchmark aluminum premium surges over $100 in a single quarter.

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According to media reports, due to conflicts in the Middle East leading to tighter global market supply, Rio Tinto Group and South32 have offered record-high aluminum supply premiums for the third quarter to Japanese clients.

Rio Tinto's premium quote for refined aluminum is $460 per ton (a spot surcharge above the benchmark price), while South32's quote is $480 per ton. If accepted, these quotes will be more than $100 higher than the prices agreed in supply deals by these mining giants in the second quarter.

As Asia's major aluminum importer, Japan's aluminum premium (known as "Main Japanese Port Premium," or MJP) is widely regarded in the industry as the benchmark reflecting East Asian demand.

Thanks to its smelters set up in Canada and Australia, Rio Tinto has become one of the largest suppliers to Japan for this key metal, which is widely used in automotive and home appliance manufacture.

Since the outbreak of the Iran war at the end of February, with the Strait of Hormuz nearly closed, cutting off supply from a region accounting for about 9% of global capacity, aluminum futures prices on the London market have risen by about 17%. In 2025, about one-third of Japan's imported aluminum will come from the Middle East.

U.S. Midwest aluminum premiums have surged to historic highs, continuing the drastic rise triggered by Trump's previous tariff increases on aluminum.

According to a previous article from WallstreetCN, the blockade of the Strait of Hormuz caused aluminum output in the Gulf region to plummet by 35% in April, with raw material inventories at smelters facing depletion. Analysts warn that substantive supply shortages will erupt in the next one or two months.

LME aluminum prices are currently near four-year highs. JPMorgan predicts the aluminum market will face its largest annual deficit since 2000, and prices may surge to $4,000 per ton in the coming months.

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