News: RIO UPDATE 1-Japan Q3 aluminium premium rises by 24-25% to 6-yr high -sources

• Q3 premium climbs to $185/T, highest since Q2 2015
• Jump marks 4th consecutive quarterly increase
• Higher U.S., European premiums, rising freight costs boost premium

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The premium for aluminium shipments to Japanese buyers for July to September was set at $185 a tonne, five sources directly involved in pricing talks said, the highest in more than six years as global demand picks up after a pandemic-induced slump.

The premium was 24-25% higher than the $148-149 a tonne paid from April to June, marking the fourth consecutive quarterly increase and the highest since the April-June quarter in 2015.

It has more than doubled since a year ago, backed by solid recovery in the U.S. and European economies and rising freight costs amid a very tight global container market, the sources said.

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.

The latest quarterly pricing negotiations began last month between Japanese buyers and global suppliers including Rio Tinto (RIO) RIO.L and South32 (S32) .

The settlements came earlier than usual as global producers negotiated aggressively amid robust demand as rising coronavirus vaccination rates led to an easing of pandemic curbs, the sources said. They declined to be named due to the sensitivity of the talks.

"It (the premium) was higher than we had hoped, but we needed to compromise to secure the metal as local demand is also recovering in broad industries including semiconductors and automobiles," a source at one Japanese end-user said.

One global producer has struck all its deals at its initial offer price of $185 a tonne, while another supplier which had earlier proposed $200 a tonne lowered its offer after some deals were done at $185 a tonne, the sources said.