By Yuka Obayashi
TOKYO Feb 24 Some big aluminium producers have
pushed up their proposed premiums on primary metal to Japanese
buyers by 45-47 percent to a record $370-$375 per tonne for
April-June shipments, four sources involved in quarterly pricing
talks said on Monday.
Japan is Asia's biggest importer of the metal, and the fee
sets the benchmark for the region.
The offers, jumping from $255 per tonne in
the previous quarter, come as premiums have also soared in
Europe and the United States due to smelter shutdowns and
financing deals, which have squeezed the availability of
aluminium in the spot market.
The latest negotiations began this month between Japanese
buyers and miners including Rio Tinto Ltd and
United Company Rusal Plc and are expected to
continue to next month.
Rio recently sent a letter to its Japanese clients, seeking
a premium of $375, while Rusal offered $370 earlier this month,
according to the sources.
Premiums are paid over the London Metal Exchange cash price
to secure physical metal.
Premiums paid in Europe raced to record highs early in
February, up more than 30 percent from the beginning of the
year, and have remained at high levels of around $360 a tonne
above the LME cash aluminium price .
Still, they are below levels in North America, where Midwest
aluminium premiums rose to a record 20.5 cents per lb
($452/tonne) earlier this year.
"Producers are saying that they need to raise the premiums
as high as the other regions as physical metal supply is tight,"
according to three sources at aluminium users.
"To offset weaker metal prices, producers need higher
premiums. Otherwise, we can't afford to pay production costs," a
producer source said.
But buyers were reluctant to accept the high offers.
"These offers are insane. Premiums in the Midwest are now
falling, and aluminium inventories at Japanese ports show no
tightness," a user source said.
Premiums in North America have slipped back to around 19.5
cents/lb from the record 20.5 cents/lb, according to a trader.
Aluminium stocks held at three major Japanese ports were
266,700 tonnes at the end of January, up 1.5 percent from a
month earlier, trading house Marubeni Corp said earlier
Another trader, however, said the buyers may be forced to
accept a hike.
"Producers look committed to win higher premiums this time.
I am afraid premiums paid in Japan will likely move higher until
the LME metal price rebounds as producers intend to secure
somewhere between $2,000-$2,200 (per tonne) in total," he said.
For the January-March quarter, Japanese buyers mostly agreed
to pay a premium of $255 per tonne, up at least 3 percent from
the prior quarter and matching a record high hit in 2012.