News: RIO UPDATE 1-Global aluminium producer seeks Q1 premium of $95/T -sources

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A global aluminium producer has offered Japanese buyers a premium of $95 per metric ton for January-March primary metal shipments, down 2% from the current quarter, three sources directly involved in quarterly pricing talks said.

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.

The figure is lower than the $97 per ton PREM-ALUM-JP paid in October to December, which was down 24% from the prior quarter, and is the lowest since the January-March quarter this year.

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

The initial offer of $95 came from one global producer, while another supplier indicated a similar level although it was not an offer, a source at a Japanese trading house said.

"But buyers are demanding lower levels as spot premiums are hovering at around $80 amid dull demand and as Japanese companies want to reduce inventories ahead of the end of the financial year in March," the source said.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT stood at 377,200 tonnes at the end of October, above 287,100 tonnes a year earlier, according to Marubeni Corp 8002.T .

Reflecting sluggish demand, Japan's shipment of aluminium sheets and extrusions fell 1.4% in October on year, marking the 20th consecutive month of decline, data of the Japan Aluminium Association shows.

Weakening premiums amid slack demand in Europe and the United States were also behind the buyers' requests for lower Japan premiums, another source at a local aluminium rolling mill said.

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