Japan Q3 aluminium premiums set around $250/T -sources

TOKYO, June 21 Fri Jun 21, 2013 9:33am BST

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TOKYO, June 21 (Reuters) - Japan's term aluminium premiums for shipments between July and September were mostly set around $250 per tonne, compared with $248 to $250 in the previous quarter, four sources directly involved in the talks said on Friday.

Japan is Asia's biggest importer of aluminium and the premiums for its imports, agreed each quarter, set the benchmark for the region.

The moderate increase reflects a perception among suppliers that conditions have improved in Japan under Prime Minister Shinzo Abe's $1.4-trillion stimulus programme, but the final premium was down from initial requests for an increase to $252-$254 from producers.

Buyers were pushing hard to keep the premium in line with the April to June quarter as they do not believe that so-called Abenomics has stoked demand, sources said.

"Producers wanted to raise premiums even as little as $1 because they said Abenomics will help boost demand, but buyers don't believe that is a good reason as demand has not picked up and inventories at Japanese ports are increasing," said a source at a buyer.

A source at one of the suppliers said most deals were booked at $250 with some at $251. Some buyers are still holding out for a premium below $250, according to three sources.

Spot premiums are at around $250 in Asia, according to two trading sources.

Premiums are paid over London Metal Exchange (LME) cash aluminium prices to secure physical metal on a cost, insurance and freight basis to the main Japanese ports.

Premiums reached record highs last year as although the global aluminium market is in a surplus, most of the material is tied up in financing deals and is not available to market.

In a financing deal, banks or trading houses buy metal, sell it forward and store it cheaply in the interim.

The deals were done between major global producers, such as BHP Billiton, Alcoa Inc and Rio Tinto Alcan , and Japanese firms, including trading houses that buy on behalf of end-users such as manufacturers of aluminium sash windows, automobiles, cans and electronics.

Premiums for shipments into Japan hit records of $254 to $255 a tonne in the fourth quarter of last year, when supply was constrained as consumers competed with investment demand for the metal, and due to bottlenecks at warehouses monitored by the LME.

Aluminium stocks held at three major Japanese ports were at 271,300 tonnes by the end of May, down 2.2 percent from a month earlier, but up 22 percent from the same month the year before, trading house Marubeni Corp said last week.

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