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.
The quarterly pricing negotiations began last week between Japanese buyers, such as rolling mills and trading houses, and global suppliers of aluminium ingots, including Rio Tinto Ltd and South32 Ltd , and are expected to continue until later this month. For the January-March quarter, Japanese buyers agreed to pay a premium of $85-$86 per tonne , down 13-14% from the prior quarter.
A source at one global supplier said the company was looking to raise premiums as premiums in the United States, Europe and elsewhere in Asia were climbing "due to solid demand and tight supply" and expectations of a recovery in car production. But most buyers were not convinced.
A source at a Japanese rolling mill said his company was "stunned by the sharp hike" as domestic demand remained weak. Mirroring slack demand, aluminium stocks at three major Japanese ports rose by 2.8% to 392,500 tonnes at the end of January from a month earlier and was 34% higher than a year-earlier level, according to Marubeni Corp .
The sources declined to be identified due to the sensitivity
of the discussions.
(Reporting by Yuka Obayashi; Editing by Kim Coghill)
