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Dec-Oct premium marks third quarterly increase

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Producers come down from initial offers of $180-$185/T

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Local demand remains sluggish

(Adds comment from mill in paragraph 5, trader comment in

paragraph 11, detail on demand, stocks, pricing talks from

paragraph 6)

By Yuka Obayashi

TOKYO, Oct 9 (Reuters) - The premium for aluminium

shipments to Japanese buyers for October to December was set at

$175 a metric ton, up 1.7% from the prior quarter, on supply

concerns amid higher premiums in Europe, four people directly

involved in pricing talks said.

The figure is higher than the $172 per ton paid in July to

September, and represents a third consecutive quarterly increase

and the highest since the January-March quarter in 2022.

Still, it is below initial offers of $180 to $185 per ton

made by global producers.

Japan is Asia's major importer of the light metal and the

premiums for primary metal shipments it agrees to

pay each quarter over the London Metal Exchange cash price

set the benchmark for the region.

"The increase from Q3 reflected producers' worries over

tighter supplies in Asia, as some metals could be diverted to

Europe where premiums were higher," a source at a Japanese

aluminium rolling mill said.

Meanwhile aluminium demand in Japan remained sluggish across

both industries and construction sectors, with ample

inventories, sources said.

Aluminium stocks at three major Japanese ports

rose 9.2% month-on-month to 327,300 metric tons

by the end of August, trading house Marubeni ( MARUF ) said last

month.

Quarterly pricing talks began in late August between

Japanese buyers and global suppliers including Rio Tinto

and South32 ( SHTLF ).

In September, negotiations briefly widened the divide

between buyers and sellers after one producer hiked its offer to

$200 per ton, citing concerns that a fire at a smelter of

aluminium group Press Metal in Malaysia could tighten supplies

for the region.

But producers made concessions, as the fire's impact was

expected to be limited and as they considered weak local demand

and rising inventories, the sources said.

"Japanese companies don't purchase much metal from Press

Metal, so the impact will be limited," said a source at a

Japanese trading firm. Press Metal said last month that about 9%

of its total smelting capacity was affected by the fire.

The sources declined to be identified because of the

sensitivity of the discussions.