News: RIO UPDATE 1-Japan buyers agree to pay higher Q3 aluminium premiums, sources say

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The premium for aluminium shipments to Japanese buyers for July to September was set at $172 per metric ton, up 16%-19% from the previous quarter, reflecting tighter supplies in Asia, five sources directly involved in pricing talks said.

The figure is higher than the $145-$148 per ton paid in April to June and marks a second consecutive quarterly increase. But it was below the initial offers of $175-$190 per ton made by global producers.

Japan is a major Asian importer of the light metal and the premiums PREM-ALUM-JP for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange cash price CMAL0 set the benchmark for the region.

The increase from the previous quarter reflected tighter supplies in the region as some metals were diverted to Europe and the United States where premiums were higher and demand was stronger, a source at a global producer said.

Demand for the light metal in Japan remained lacklustre, all the sources said.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT stood at 317,860 metric tons at the end of June, up about 3% from the previous month, according to Marubeni Corp 8002.T .

The quarterly pricing talks began in late May between Japanese buyers and global suppliers including Rio Tinto RIO.L (RIO) and South32 (S32) .

One producer lowered its offer to $172 per ton late last week after raising it once in mid-June to $185 from the initial proposal of $175, as the talks were dragging longer than usual, another source at a Japanese end-user said.

The negotiations usually end before the new quarter begins, but this time it took longer to settle due to wider gaps between buyers and sellers after the producer temporarily hiked its offer despite weak local demand, the second source said.

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

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