News: S32 UPDATE 1-Global aluminium producer seeks Q4 Japan premium of $185/T, sources say

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A global aluminium producer has offered Japanese buyers a premium of $185 per metric ton for October-December primary metal shipments, up 8% from the current quarter, two people directly involved in quarterly pricing talks said on Wednesday.

Japan is a major Asian importer of the metal and the premium for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 sets the benchmark for the region.

For the July-September quarter, Japanese buyers agreed to pay a premium of $172 per ton PREM-ALUM-JP , up 16%-19% from the prior quarter.

One producer offered a premium of $185 per ton on Tuesday, citing tightening supply in Asia as some ingots were diverted to Europe and North America, where premiums are higher, the people said, on condition of anonymity given the sensitivity of the discussions.

Lower inventories at Japanese ports also indicate a tighter market, even though demand in Japan remains sluggish, the people said.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT fell to 299,600 metric tons at the end of July, down about 5.7% from the previous month, according to Japanese trading house Marubeni 8002.T .

But one source said "the offer is too high, given that the current spot prices in Japan are in the $160-$170 range, reflecting lacklustre demand".

Quarterly pricing negotiations began this week between Japanese buyers and global suppliers, including Rio Tinto (RIO) and South32 (S32) , and are expected to continue until later next month.