Japan’s aluminum premium set up to $ 119

Japanese aluminum buyers will pay up to 8 percent less in premiums in the July to September quarter after a fall in spot premiums, five sources directly involved in quarterly pricing talks said.

The Japanese aluminum premium was set at $ 118 to $ 119 per ton for metal to be shipped in the third quarter, down 7 percent to 8 percent from $ 128 per ton in the previous quarter, the sources said. Japan is Asia’s biggest importer of aluminum. The premium over the London Metal Exchange cash price that its buyers agree to pay each quarter for primary metal shipments sets the benchmark for the region.

The latest agreement follows two quarters of rising premiums, up 35 percent in the second quarter and 27 percent in the first quarter.

“We have settled the deals at $ 118 and $ 119 a ton with all of the producers whom we buy the metal from,” a source at an end- user said, who asked to remain anonymous due to the sensitivity of the negotiations.

A source at another fabricator said all the deals were signed at $ 118 a ton while a source at another end- user said his company has agreed with all of the suppliers to pay $ 119 a ton.

The quarterly pricing negotiations between Japanese buyers and global producers began in May, including Rio Tinto, South32, Alcoa Corp, and Rusal, with initial offers at $ 123 to $ 128 a ton.

Buyers countered at around $ 110 to $ 115 a ton due to lower spot premiums in Asia and the US, but some signed at $ 119 early this month.