Global producers raise Q1 aluminium premium offers to Japan buyers, sources say

By Yuka Obayashi

TOKYO, Dec 26 (Reuters) - Top aluminium producers have raised their premium offers to Japanese buyers for January-March primary metal shipments to $210-$225 per metric ton from initial offers of $190-$203, two sources involved in quarterly pricing talks said.

Japan is one of Asia's biggest importers of the light metal, and the premiums it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 set the benchmark for the region.

The latest quarterly pricing negotiations began in early December between Japanese buyers and miners including Rio Tinto RIO.AX, RIO.L and South32 S32.AX. The negotiations usually conclude before the next quarter begins, but this time the talks are expected to continue next month, the sources said.

They declined to be identified due to the sensitivity of the matter.

Producers earlier offered Japanese buyers premiums of $190-$203 a ton, up 121%-136% from the current quarter.

However, offers were revised to $210-$225 after South32 announced plans last week to mothball the Mozal aluminium smelter in Mozambique in March due to the company's failure to secure a power deal with the government, the sources said.

"Global supply will tighten further by the Mozal suspension," said one of the sources, who works at a producer.

"We had hoped to reach an agreement this month, but the gap between sellers and buyers remains wide, and negotiations are likely to extend into the new year," the source added.

Despite weak demand in Japan, spot premiums have risen to around $160-$170 per ton, said the second source, at a rolling mill, adding that an increase from the current quarter appeared unavoidable.

"As a buyer, we see around $165 as a reasonable premium for the next quarter, but the gap with producers is significant and reaching an agreement will take time," that source added.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT fell to 312,100 tons by the end of November, down 5.2% from the previous month, according to Marubeni 8002.T.

(Reporting by Yuka Obayashi; Editing by Jamie Freed)

((Yuka.Obayashi@thomsonreuters.com; +813-4563-2761;))