Japan Q4 aluminium talks drag out in effort to bridge gap, say sources

By Yuka Obayashi TOKYO, Oct 17 (Reuters) – Quarterly pricing talks between Japanese aluminium buyers and global producers have stretched unusually long as both struggle to close a wide gap on primary metal shipments for October to December, three sources directly involved in the talks said. Japan is a major Asian importer of the metal and the premiums it agrees to pay each quarter over the London Metal Exchange (LME) cash price set a regional benchmark, but it is unusual for talks to stretch weeks past the quarter's start. The talks between Japanese buyers and global suppliers, such as Rio Tinto, and South32, began early in September. Producers initially offered Japanese buyers premiums of $98 to $103 per ton for October-December shipments, down 5% to 9% from the July-September level, amid sluggish demand. One producer later cut its offer to as low as $97 from $103, but buyers declined, seeking levels in the $80s and citing spot premiums in the $70s, the sources said. "The $97-offer has expired once and we have asked the producer to make a fresh offer," said a source at a Japanese fabricator, adding that weak demand and high inventories are keeping bids in the $80s. Aluminium stocks at three major Japanese ports rose to 341,300 metric tons by the end of September, up 1.8% from the previous month, trading house Marubeni said on Friday. Sellers are holding out for higher levels as rising premiums in the United States and Europe are expected to tighten supplies in Asia, a source at a producer said, adding that talks could continue toward the end of this month. The sources declined to be identified as the matter is a sensitive one. (Reporting by Yuka Obayashi; Editing by Clarence Fernandez)

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