News: S32 UPDATE 1-Global aluminium producer seeks Q3 premiums of $175/T, sources say

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A global aluminium producer has offered Japanese buyers a premium of $175 per metric ton for July-September primary metal shipments, up 18% to 21% from the current quarter, three sources directly involved in quarterly pricing talks said on Wednesday.

Japan is a major Asian importer of the light 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 April-June quarter, Japanese buyers agreed to pay a premium of $145-$148 per ton PREM-ALUM-JP , up 61% to 64% from the prior quarter.

"The increase reflected tighter supply in Asia due to strong demand from European customers," said a source at the producer, noting that higher premiums in Europe were attracting global producers to send supply to the region. He added premiums in North America were also much higher than in Asia.

Japanese buyers, however, consider the level as too high because demand in the country's industrial and construction sectors remains sluggish and inventories are adequate, another source at a Japanese trading house said.

The sources declined to be identified because of the sensitivity of the discussions.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT stood at 308,100 metric tons at the end of April, according to Marubeni Corp 8002.T , higher than the 250,000 tons to 300,000 tons that are considered healthy.

Quarterly pricing negotiations began late last week between Japanese buyers and global suppliers, including Rio Tinto Ltd (RIO) and South32 Ltd (S32) , and are expected to continue until next month.