Rio Tinto PLC has increased its aluminum premium quotation for Japanese customers to $350 per ton for primary aluminum shipments from April to June. This represents a 79% increase compared to the current quarter.

The revised quotation is 40% higher than Rio Tinto's previous offer of $250 per ton. If accepted by customers, this would be the highest premium since the second quarter of 2015, when it reached $380 per ton.

Japan is Asia's largest metal importer. The premium it agrees to pay for primary aluminum shipments, on top of the London Metal Exchange cash price, serves as the benchmark for the region.

In late February, global producers had initially proposed a premium range of $220 to $250 per ton for the April-June period to Japanese buyers, which was an increase of 13% to 28% over the current quarter. Subsequently, these offers were withdrawn or allowed to expire as producers assessed the risks to shipments passing through the Strait of Hormuz due to Middle East conflicts. A source directly involved in the quarterly negotiations stated that the reason for the increased quotation is stronger premiums in Europe and the United States, coupled with rising freight and insurance costs. The source declined to be named due to the sensitivity of the matter. Rio Tinto declined to comment.

The conflict in the Middle East, which accounts for 9% of global aluminum supply, has unsettled the light metal market, effectively freezing shipments via the Strait of Hormuz. Qatar's Qatalum smelter has begun a production shutdown, while Aluminum Bahrain, which operates one of the world's largest smelters, has declared force majeure.

Approximately 20% of Japan's primary aluminum ingot demand will rely on imports in 2025. Since late February, aluminum premiums in South Korea have also risen significantly.

Japan's quarterly pricing negotiations began last month and are expected to continue until the end of March.