March 11, 2019 / 11:08 AM / 7 days ago

UPDATE 1-Some Japanese aluminium buyers agree Q2 premium at $105/T-sources

* Deal marks 24-27 pct hike from Q1 and first rise in 3 quarters

* Global smelters originally sought $109-112/T

* Lower China export, Japan traders’ lower stocks help tighten mkt (Adds comments and details)

By Yuka Obayashi

TOKYO, March 11 (Reuters) - Some Japanese aluminium buyers have agreed to pay a premium of $105 per tonne for shipments in April to June, reflecting higher local spot premiums, four sources directly involved in the pricing talks said on Monday.

It is the first increase in three quarters and puts the premium at 24 percent to 27 percent above the $83-$85 per tonne paid this quarter. Producers had originally sought $109-$112 per tonne.

Japan is Asia’s biggest importer of aluminium and the premiums PREM-ALUM-JP for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange cash price set the benchmark for the region.

“We have settled with two global producers at $105 per tonne last week,” a source at an end-user said, saying that lower export from China of semi-fabricated metal which can be melted down for use as primary metal was behind a tighter market in Asia.

China’s aluminium exports fell to 343,000 tonnes in February, down a whopping 37.9 percent from January’s record high of 552,000 tonnes.

A source at a trading house also said his company has signed term contracts with three producers at $105 per tonne.

“Many Japanese trading companies have trimmed inventories ahead of the end of their financial year on March 31, which helped tighten local supply and bolster spot premiums,” he said.

The latest quarterly price negotiations began late last month between Japanese buyers and global producers, including Rio Tinto, South32 Ltd and Alcoa Corp .

Other Japanese buyers are still negotiating with global suppliers, with further deals expected later this month.

Reporting by Yuka Obayashi; editing by Richard Pullin and Emelia Sithole-Matarise

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