Japanese buyers take some Q2 aluminium at premiums of $248-$249/T

TOKYO, March 19 Tue Mar 19, 2013 5:07am EDT

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TOKYO, March 19 (Reuters) - Japanese buyers have agreed to premiums for some April-June aluminium shipments at $248-$249 per tonne, up from the previous quarter and in line with increased demand after the winter slowdown, sources involved with trade talks said on Tuesday.

Other buyers are still holding out, aiming to settle at premiums as low as $244-$245, and it remained unclear whether a consensus on the premiums will emerge by Friday, a week after the deadline for April shipments, three sources involved with the talks between buyers and producers told Reuters.

Japan is Asia's biggest importer of aluminium and the premiums for its imports, agreed each quarter, set the benchmark for the region. Premiums are paid over London Metal Exchange (LME) cash aluminium prices to secure physical metal on a cost, insurance and freight basis to the main Japanese ports.

The premiums for the second quarter are up from premiums of $240-$245 in the January-March period. Premiums for shipments into Japan hit records of $254 to $255 a tonne in the fourth quarter of last year, when supply was constrained as consumers competed with investment demand for the metal, and due to bottlenecks at warehouses monitored by the London Metal Exchange.

At least one major producer is still trying to hold onto premiums closer to the record level seen in the last quarter of 2012, according to the three sources involved in the talks.

One of the sources, on the buy side, said that the benchmark prices are likely to be settled below $250 a tonne now that some deals have been done below that mark.

"I think any figure above $250 is out of the question," the source said.

Major producers say that Japanese companies were trying to decrease inventories in January-March due to the end of the business year, and that they would start buying more after that.

"Producers insist on higher premiums because Japanese markets will see rising demand from now on, and because the economy is not so bad," one of the buyers said. "Buyers on the other hand, say port stocks are high and that we have not seen evidence of strong demand due in part to a weaker yen."

Aluminium stocks held at three major Japanese ports were at 286,200 tonnes by the end of February, down 9.3 percent from a month earlier, but up 8.2 percent from the same month the year before, trading house Marubeni Corp said a week ago.

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