News: RIO UPDATE 1-Japan Q2 aluminium premiums set at 6-yr highs-sources

• Q2 premiums rise 14-15% from Q1, marking 3rd quarterly increase
• Premiums climb on tight container market, recovering demand
• Spot premiums in Japan stand at above $150-$160/T -sources

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Premiums for aluminium shipments to Japanese buyers for April to June were set at $148-$149 a tonne, the highest in 6 years, on a tight container market and recovery in demand from a pandemic-induced slump, four sources involved in pricing talks said.

Premiums rose 14-15% from this quarter's $130 per tonne, making this the third straight quarterly increase and the highest premiums since the same quarter in 2015. Producers' initial offers were at $149 to $165 per tonne.

Japan is Asia's biggest importer of the light metal and the premiums PREM-ALUM-JP 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.

"We have signed contracts with all of producers at $148-$149 a tonne," a source at a Japanese trading house said.

The higher premiums reflected supply issues and rising freight costs amid a tight container market and solid demand from automakers, the source said.

Container shipping companies have been struggling for months with disruptions caused by the coronavirus pandemic and a surge in demand for retail goods that led to wider logistical bottlenecks around the world.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT have been hovering below the key 300,000-tonne level since October, underlining tightness in the market.

Still, buyers have sought lower levels than producers' initial offers due to uncertainty over the demand outlook. A global semiconductor chip shortage has disrupted some manufacturing activity, with automakers cutting down on production.

"We haven't seen a slowdown in orders from automakers and spot aluminium premiums here are at above $150-$160 a tonne now," a source at a producer said.

"But we'll closely watch how the chip shortage will affect output of automakers next quarter," he said.

All the sources declined to be identified as they are not authorised to talk to the media.