Alcoa Corporation (AA) shares tumbled 5.03% in pre-market trading on Friday, as news of weakening aluminum demand in Asia cast a shadow over the industry's outlook. The sharp decline comes in the wake of reports that Japanese aluminum buyers have agreed to a significantly lower premium for the fourth quarter of 2025.

According to sources directly involved in the pricing talks, the premium for aluminum shipments to Japanese buyers for October to December was set at $86 per metric ton, marking a 20% decrease from the previous quarter's $108 per ton. This represents the third consecutive quarterly decline and is lower than the initial offers of $98-$103 per ton made by producers. Japan, being a major Asian importer of aluminum, sets a benchmark for the region with its quarterly premium negotiations.

The drop in premiums reflects persistently weak demand, especially in the construction materials sector, and high inventory levels in Japan. Aluminum stocks at three major Japanese ports rose to 341,300 tons by the end of September, up 1.8% from the previous month. This oversupply situation and reduced pricing power could potentially impact Alcoa's global sales and profitability, contributing to investor concerns. As the market digests this news, traders will be closely watching how Alcoa addresses these challenges in its upcoming communications and strategic decisions.