Japan Q3 aluminium premiums mostly set at record high $400-$408/T-sources

TOKYO, July 1 Tue Jul 1, 2014 6:28am EDT

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TOKYO, July 1 (Reuters) - Japan's aluminium premiums for July-September shipments were mostly set at a record high $400-$408 per tonne, up 8-12 percent from the previous quarter, on higher overseas rates and solid local demand, sources directly involved in the talks said.

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

An end-user source said most deals were done at $405-$408, while another end-user source said most deals were booked at $400-$405.

A source at one of the producers said most shipments were booked at $407-408, with some deals done at $410, while another producer source said most deals were agreed near $405.

Negotiations are still continuing between some suppliers and buyers.

This was higher than the premium of $365-$370 per tonne PREM-ALUM-JP paid in the April-June quarter.

The latest quarterly pricing negotiations began in May between Japanese buyers and aluminium suppliers including Rio Tinto Ltd , Alcoa Inc, BHP Billiton and United Company Rusal Plc.

The surging aluminium premiums in Japan follow an increase in spot premiums in Europe and high rates in the United States as the metal continues to be used as collateral for financing deals, making it unavailable to the market.

Healthy demand for aluminium by Japanese fabricators is also behind the higher premiums, producer sources said.

Japan's demand for aluminium rolled products is expected to rise 0.6 percent this business year to March 2015 from a year earlier to 2 million tonnes on robust export demand to China and Southeast Asia, the Japan Aluminium Association said in March. (Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman)

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