TOKYO: Japan’s aluminium premiums for January-March shipments were set at $110 per ton, up 22 percent from the previous quarter, on higher overseas rates and falling local inventory, six sources directly involved in the talks said.
The deal, which marks the first increase in four quarters and a rise from a $90 per tonne premium PREM-ALUM-JP in the previous quarter, is in line with a climb in U.S. and European surcharges for physical aluminium amid tighter availability.
“We’ve accepted an increase as overseas premiums had climbed since autumn and we no longer see a deep-discount in local spot premiums as domestic inventory has declined,” a source at an end-user said.
Premiums in Europe have stabilized after climbing to $160-$170 a tonne for duty-paid material in Rotterdam in November, up from $115-$135 in September.
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.
Three end-user sources and two buyers at trading houses said all deals were done at $110, while a source at a producer said all shipments were booked at $110. Another end-user source said some deals were struck in December at $111.
The latest quarterly pricing negotiations began in late November between Japanese buyers and global miners, including Rio Tinto , Alcoa and South32 Ltd. Major producers had initially offered metal at premiums of $115 to $120, above the $95 to $100 range buyers were considering.
But still-high inventory in Japan and weak appetite for January-March delivery forced miners to lower their offers, a trader said. “Some buyers have skipped or reduced their purchase for the January-March quarter as they have enough inventory,” he said.
Aluminium stocks at Japan’s three major ports hit a record high of 502,200 tonnes in May, but fell to 401,000 tonnes by end-November due to lower imports. They are still above the 230,000 tonnes to 270,000 tonnes held in early 2014.
Japan’s aluminium ingot imports for the first 11 months in 2015 were down 14 percent on a year earlier. Industry figures have forecast a rise in premiums over 2016 as supply tightens due to cutbacks and closures by producers.
