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Q1 premium climbs to $228/T, highest since Q2 2015

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Jump marks 4th consecutive quarterly increase

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Negotiations took a month longer than usual

(Adds details in paragraph 3, 5-11, and bullets)

By Yuka Obayashi

TOKYO, Jan 24 (Reuters) - The premium for aluminium

shipments to Japanese buyers for January to March was set at

$228 a metric ton, the highest in about 10 years, driven by

supply fears amid stronger overseas premiums, five sources

directly involved in pricing talks said.

The figure is higher than the $175 per ton paid in the

October-to-December quarter and marks a fourth consecutive

quarterly increase and the highest since April-June quarter in

2015.

Still, it is below initial offers of $230 to $260 per ton

made by global producers.

Japan is a major importer of the light metal in Asia and the

premiums for primary metal shipments it agrees to

pay each quarter over the benchmark London Metal Exchange (LME)

cash price sets the benchmark for the region.

Japan's domestic demand remained sluggish, but concerns over

tighter supply amid higher U.S. premiums, tied to a potential

tariff increase on aluminium imports from Canada and Mexico by

U.S. President Donald Trump, have pushed premiums higher in Asia

as buyers move to secure the metal, a trading house source said.

Higher premiums were also supported by worries over China's

removal of a 13% export tax refund for aluminium

semi-manufactured products from Dec. 1. This could boost ingot

demand from Asian rolling mills outside China to produce

semi-finished products, another source at a global producer

said.

"We have already received some inquiries for additional

supply from Asian customers," the source added.

Meanwhile, aluminium stocks at three major Japanese

ports

rose

to 323,600 tons by the end of December, up about 13% from

the previous month, according to Marubeni ( MARUF ). The increase

reflected slow domestic demand from automakers and construction

segment, the first source said.

Quarterly pricing talks began in late November between

Japanese buyers and global suppliers including Rio Tinto

, and South32 ( SHTLF ).

The negotiations took about a month longer than usual to

conclude, with some producers and buyers

settling

at $228 in mid-December, while another producer pushed for

a higher level, according to the sources.

The sources declined to be identified due to the

sensitivity of the matter.