March 20, 2018 / 8:10 AM / Updated 2 hours ago

UPDATE 1-Japan Q2 aluminium premiums set at $129/T, highest in three years

* April-June premiums mark the highest in 3 years

* Higher premiums reflect surging U.S. spot premiums

* Producers’ initial offers were at $132-135/T

* Impact from new U.S. tariffs on aluminium unclear-buyer (Adds quotes and details)

By Yuka Obayashi

TOKYO, March 20 (Reuters) - Japanese aluminium buyers have agreed to pay producers premiums for supplies of the metal during the second quarter that are 25 percent higher than the first quarter, reflecting surging spot premiums in the United States, five sources directly involved in the quarterly pricing talks said.

The two sides agreed to a premium PREM-ALUM-JP of $129 per tonne for metal to be shipped during the April to June quarter, up from $103 in the first quarter. The premium is the highest in three years and marks the second consecutive quarterly rise.

Japan is Asia’s biggest aluminium importer and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

The latest negotiations began last month between Japanese buyers and global producers, including Alcoa Corp, Rio Tinto and South32 Ltd, with initial offers for premiums ranging between $132 and $135 a tonne.

The increase reflects a surge in U.S. spot premiums to the highest in almost three years after U.S. President Donald Trump flagged a 10 percent import duty, as buyers sought to secure metal before higher costs come into force.

Trump pressed ahead earlier this month with the tariffs but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier “no-exceptions” stance.

U.S. spot premiums for Comex aluminium rose to about 19.2 cents a pound ($423 a tonne) last week, the highest since March 2015.

“All the contracts have been signed at $129 per tonne,” a source at a Japanese aluminium fabricator said.

Three other buyer sources said they also struck their deals at $129 per tonne while a source at a smelter said his company agreed to pay $129 per tonne for its contracts.

The sources all spoke on the condition of anonymity due to the sensitivity of the matter.

The new premium is lower than the U.S. spot level, but is higher than current Japanese premiums in the low $120 a tonne range, a source at a trading company said.

“It’s still unclear how the U.S. new tariffs will affect global aluminium flow in the mid- to long-term as we don’t know which countries or products will be exempted or how soon and how much the U.S. smelters will resume operations,” he added.

“I would be more interested in China’s output after its winter pollution controls,” he added.

Reporting by Yuka Obayashi; Editing by Christian Schmollinger

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