(Adds quotes, details) The premium for aluminium shipments to...

(Adds quotes, details)

The premium for aluminium shipments to Japanese buyers for July to September was set at $127.5 per metric ton, near the previous quarter's levels, as local demand remained sluggish with ample stocks, five sources directly involved in pricing talks said.

The figure is the middle of the $125-$130 per metric ton range in the April-June quarter but lower than the initial offers of $165-$180 per metric ton made by producers.

Japan is Asia's biggest importer of the light metal and the premiums PREM-ALUM-JP for primary shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 set the benchmark for the region.

The agreement came after protracted negotiations in which producers sought to raise premiums from the previous quarter while buyers wanted to cut levels, the sources said.

One of the sources, at a Japanese aluminium rolling manufacturer, said the buyers were looking for a price of $100-$110 per ton but ran out of time in negotiations.

Producers initially predicted the market would tighten because of Japan's declining imports of ingots and higher premiums overseas, but lowered their offers amid weak demand in construction and automobiles with high inventories, the sources said.

Aluminium stocks at three major Japanese ports AL-STK-JPPRT were at

357,490 metric tons

at the end of June, according to Marubeni 8002.T , above the 250,000-300,000 tons that are considered appropriate.

Japan's imports of aluminium ingot in January-June fell by 32% from a year earlier, with those from Russia plunging by 59%, the trade data shows.

Many Japanese companies have reduced purchases of Russian supply after Moscow's invasion of Ukraine, which Russia calls a "special operation".

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

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

The negotiations are supposed to end before the start of the new quarter, but they have dragged on for three consecutive rounds because of a wide gap in the two sides' market outlooks.