News: RIO UPDATE 1-Global aluminium producers offer Q1 premiums of $138-$140/T -sources

• Offers are up 57%-59% from current quarter's $88/T
• Higher offers reflect solid demand, tight supply, rising freight
• Japanese buyers are seeking lower premiums

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Global aluminium producers have offered Japanese buyers premiums of $138-$140 per tonne for January-March primary metal shipments, up 57%-59% from the current quarter, amid recovering demand, three sources directly involved in quarterly pricing talks said on Wednesday.

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 CMAL0 set the benchmark for the region.

For the October-December quarter, Japanese buyers agreed to pay a premium of $88 per tonne PREM-ALUM-JP , up 11% from the prior quarter.

"We have received one offer at $138 a tonne and another at $140 a tonne last week," a source at a Japanese trading house said.

The higher offers reflect a sharp recovery in demand, especially from automakers, as well as tighter supplies and rising freight amid tight container market, the source said.

Still, Japanese buyers are seeking lower premiums as it is unclear whether the current pick-up in demand would continue in the January-March quarter and the spike in freight may be a temporary phenomena, another source at an end-user said, pointing that around $125 would be an acceptable level.

The sources declined to be named due to the sensitivity of the talks.

The latest quarterly pricing negotiations began late last month between Japanese buyers and global smelters, including Rio Tinto Ltd (RIO) and South32 Ltd (S32) , and are expected to continue until later this month.