* Jan-March premium marks first rise in three quarters
* Increase reflects higher spot premiums
* Producers' initial proposals range between $95-110/T
(Adds comments and details)
By Yuka Obayashi
TOKYO, Dec 27 Japan's aluminium premium for
shipments during January to March next year was set at $95 per
tonne, as spot premiums rose following a disruption at an
Australian smelter, six sources directly involved in the
quarterly pricing talks said.
Japan is Asia's biggest importer of aluminium and the
premiums, which consumers pay to producers on top of the London
Metal Exchange cash price for primary metal shipments,
set the benchmark for the region.
The deal, which marks a 27 percent increase from the $75 a
tonne premium PREM-ALUM-JP in the previous quarter, is the
first quarterly increase in three quarters.
"We've signed the deals at $95 a tonne with four producers,"
a source at an end-user said. He declined to be named due to the
sensitivity of the talks.
A source at a producer said that all of his company's
customers had agreed to contracts at $95 a tonne.
The quarterly pricing negotiations began last month between
Japanese buyers and global producers, including Rio Tinto
, South32, Alcoa and Rusal
, with offers ranging between $95 and $110 a tonne.
Buyers were initially seeking premiums in the low $80 a
tonne, but they compromised after Alcoa was forced to shut one
of two potlines at its Portland aluminium smelter in Australia
following a power outage early this month.
The 300,000-tonnes-per-year smelter is operating at below a
third of its capacity, Alcoa said last week.
"We accepted the $95 as spot premiums have edged higher
after the Portland news and local stocks have declined," a
source at a fabricator said.
Aluminium stocks at three major Japanese ports fell 13.8
percent to 239,900 tonnes in November from the previous month,
trading house Marubeni said earlier this month.
The inventories have been declining since hitting a record
high of 502,200 tonnes in May 2015.
Marubeni also projected last week that Japan's premiums will
stay between $80 and $140 a tonne next year.
Some Japanese buyers have said they were looking to reduce
the amount of aluminium they purchase via annual contracts,
instead turning to spot markets where premiums have dropped to
their lowest in more than seven years.
"We've cut some amount of annual contracts for 2017 as we
want to buy more metals from spot market, which is a global
trend," a source at a trading company said.
But many of end-users said they kept annual purchase volume
unchanged to secure stable supply.
(Reporting by Yuka Obayashi; Editing by Christian Schmollinger
and Jane Merriman)