TOKYO, Jan 9 (Reuters) - Quarterly pricing talks between Japanese aluminium buyers and global miners have dragged on this week as the buyers have pushed back against the record premiums sought for January-March shipments, given high stocks, sources said on Friday.
At least one deal has been done at $425 per tonne, up 1.2 percent from the previous quarter, but talks between most of the parties will continue next week, the sources said. It is highly unusual for the talks to still be going on after the new quarter starts.
Japan is Asia’s biggest importer of the metal and the premiums for primary metal shipments that it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.
The pricing negotiations started in late November between the Japanese buyers and miners including Rio Tinto , BHP Billiton and Alcoa.
By early December, the three top producers were asking the buyers to pay record premiums of $435-$440 per tonne, up as much as 4.8 percent from the previous quarter.
They pointed to higher U.S. spot premiums triggered by solid demand and smelter shutdowns that have squeezed supplies, the sources said, but Japanese buyers argued that the market environment in Asia was quite different.
“We’ve agreed $425 with one producer, but we’ll continue talks with other producers next week,” one end-user source said.
“We’ve started making some deals but most are still pending,” a source at a producer said.
For the October-December quarter, Japanese buyers mostly agreed to pay a record premium of $420 per tonne PREM-ALUM-JP, up 3-5 percent from the previous quarter. Premiums rose 64 percent last year.
“Some buyers are still bidding at $420,” a source at a producer said.
An increased supply of semi-finished aluminium products in Asia due to Chinese exports has boosted the flow of aluminium ingots to Japan, giving Japanese buyers breathing room in negotiations, the sources said.
In the first 11 months of 2014, China exported 3.17 million tonnes of semi-finished products, up nearly 7 percent from a year before. Some of these had been melted down by buyers to replace primary aluminium, traders said.
“Right now, the whole place (Asia) is flush with stocks,” a Singapore-based trader said, pointing to a build-up in South Korea and Vietnam.
Aluminium inventories at three major Japanese ports hit a record high at the end of November after imports of aluminium ingots jumped 16 percent in the first 11 months of 2014.
Reporting by Yuka Obayashi; Additional reporting by Melanie Burton in Melbourne and Polly Yam in Hong Kong; Editing by Alan Raybould