* Japan quarterly premium for Oct-Dec marks 7-year low
* Drop reflects softer spot premiums amid supply glut
* Producers cut offers from initial $80-$82/T proposals
(Adds comments and details)
By Yuka Obayashi
TOKYO, Sept 30 Japanese aluminium buyers have
agreed to a premium of $75 a tonne for metal to be shipped over
October-December, down 17-19 percent from the prior quarter, on
softer spot premiums amid a supply glut, five sources directly
involved in the talks said.
Japan is Asia's biggest importer of aluminium and the
surcharges, or premiums, which consumers pay to producers on top
of the London Metal Exchange cash price for primary
metal shipments, set the benchmark for the region.
The latest deal marks a second straight quarterly drop and
the lowest in more than seven years. For July-September, buyers
had paid a premium of $90 to $93 per tonne PREM-ALUM-JP.
"We've struck the deals at $75 a tonne with three
producers," a source with a buyer told Reuters, declining to be
named due to the sensitivity of the talks.
A source at a producer said that all of his company's
clients had agreed to contracts at $75 a tonne.
The quarterly pricing negotiations began last month between
Japanese buyers and global producers, including Alcoa Inc
, Rio Tinto and South32 Ltd,
with offers ranging between $80 and $82 a tonne.
But suppliers were forced to cut their initial pricing
ideas. Buyers were seeking premiums in the low $70 a tonne
range, because of weaker spot premiums amid high locals stocks
and soft demand in housing and construction in Japan.
Aluminium stocks at three major Japanese ports fell to
304,200 tonnes by end-August from a record high of 502,200
tonnes in May 2015, but they are still higher than the 230,000
tonnes to 270,000 tonnes held in early 2014.
Japan's combined output of rolled-aluminium products in July
and August fell about 1 percent from a year ago, according to
the Japan Aluminium Association.
"We are still not happy with $75 as the current spot
premiums are lower, but producers were not compromising any
further," a source at a fabricator said.
Japanese buyers are looking to reduce the amount of
aluminium they purchase via annual contracts, instead turning to
spot markets where premiums have dropped to their lowest in more
than seven years.
Meanwhile, surcharges for physical aluminium have stabilised
in Europe and the United States as more attractive financing
deals and firmer demand tighten the market.
(Reporting by Yuka Obayashi; Editing by Christian Schmollinger
and Tom Hogue)