Term aluminium premium talks between Australian suppliers and Japanese buyers are not making progress, with Rio Tinto and BHP seeking a $114-115 per tonne premium and Japanese buyers aiming for a level below $110, down from $118 in the fourth quarter, mills and traders said.
Settlement for the January-March quarter premium will likely be delayed into the middle of this month due to the wide price gap, they said.
Japan is the world's biggest aluminium importer, with domestic consumption of 2 million tonnes per year, equivalent to about 5 percent of global demand.
"We haven't tabled a counter offer since we received the first offer from suppliers of around $114-$115 late last month. We aim for a premium below $110," an official at an aluminium mill said.
Suppliers are bullish on the back of a relatively tight market and recent financing deals involving banks, while aluminium mills are worried about shrinking demand, they said.
Domestic demand in Japan is slowing after devastating floods in Thailand caused many Japanese firms to curb output of consumer goods using parts made in Thailand, while the strong yen is curtailing exports of Japanese goods. Aluminium is used in products ranging from computers to planes.
The premiums for the fourth quarter of 2011 -- the amount paid above LME cash prices, which on Friday traded around $2,103 a tonne -- were settled at around $118 a tonne. That was down slightly from the $120 level in July-September, which was the highest in a year.
Amid prospects of a slowdown of the economy and demand, some trading companies expect Japanese mills may reduce the volume on annual term deals in favour of spot deals.
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