Aluminum producers seek first-quarter premium of $95-$110/T from Japanese buyers: sources

Some big aluminum producers seek a premium of $95-$110 per ton from Japanese buyers for primary metal shipments in the January to March period, up 27-47 percent from the previous quarter, five sources involved in pricing talks said on Friday.

Japan is Asia's biggest importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

Any increase in the quarterly premiums would mark the first rise in three quarters, and reflect tightening supply, although buyers said the initial offers were too high, the sources said.

For the October-December quarter, Japanese aluminum buyers agreed to pay a premium of $75 a ton for the metal, down 17 percent to 19 percent from the prior quarter, on softer spot premiums amid a supply glut.

Rio Tinto Ltd has offered Japanese buyers a premium of $95 per ton following a drop in local inventories and higher demand for imported aluminum in China, while Rusal has sought a premium of $110 per ton to reflect higher U.S. premiums, the sources said.

Aluminum stocks at three major Japanese ports fell 2.9 percent in October from the previous month to 278,200 tonnes, trading house Marubeni Corp said on Monday.

Buyers are not ready to accept the offers, the sources said.

"The $110 proposal is way too high and the $95 offer is still above the levels that we think are appropriate," said a source at a trading house who declined to be named.

"We will need to accept a hike from the current quarter amid tighter supply in Asia, but only if premiums come in the low $80 a ton," a source at a fabricator said.

The quarterly pricing negotiations are held between Japanese buyers and global miners including Rio, Alcoa Inc and South32 Ltd.

Rusal has not been involved in the quarterly pricing talks over the past couple of years, but the Russian company sent an email to its customers in Japan this week in an apparent bid to have an influence in the negotiations, the sources said.

Some talks started this week and are expected to continue until next month.

Rio and Rusal declined to comment.(Yuka Obayashi）