News: RIO UPDATE 1-Global aluminium producers offer Q2 premiums of $125-$145/T - sources

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Global aluminium producers have offered Japanese buyers premiums of $125-$145 per tonne for April-June primary metal shipments, up 45%-71% from this quarter, five sources directly involved in quarterly pricing talks said.

The offers, if agreed by buyers, would mark the first increase in six quarters and the highest level since the October-December quarter in 2022, reflecting a view from producers that demand from automakers is set to pick up.

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 quarterly pricing negotiations began last week between Japanese buyers, such as rolling mills and trading houses, and global suppliers of aluminium ingots, including Rio Tinto Ltd (RIO) and South32 Ltd (S32) , and are expected to continue until later this month.

For the January-March quarter, Japanese buyers agreed to pay a premium of $85-$86 per tonne PREM-ALUM-JP , down 13-14% from the prior quarter.

A source at one global supplier said the company was looking to raise premiums as premiums in the United States, Europe and elsewhere in Asia were climbing "due to solid demand and tight supply" and expectations of a recovery in car production.

But most buyers were not convinced. A source at a Japanese rolling mill said his company was "stunned by the sharp hike" as domestic demand remained weak.

Mirroring slack demand, aluminium stocks at three major Japanese ports AL-STK-JPPRT rose by 2.8% to 392,500 tonnes at the end of January from a month earlier and was 34% higher than a year-earlier level, according to Marubeni Corp 8002.T .

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