An aluminum producer negotiating the first-quarter contract premium with Japanese buyers has revised down its offer following a weeks-long standoff between buyers and sellers, sources in the talks said Monday.
The producer, previously offering $115/mt plus London Metal Exchange cash CIF Japan for January-March shipments of primary aluminum ingot, is currently offering $110/mt plus LME cash CIF Japan, said two Japanese buyers.
The producer declined to comment.
One of the two buyers said he has rejected the $110/mt offer, saying this was still about $20/mt above his target premium. The second buyer declined to elaborate on his response.
An offer from the second producer stands at $115/mt plus LME cash CIF Japan and a third producer at $120/mt plus LME cash CIF Japan, Japanese buyers said.
Bids are at $92/mt and $95/mt plus LME cash CIF Japan.
The premiums for the current quarter are at $90/mt plus LME cash CIF Japan.
The producers have asked for a hike in the Q1 premium on the back of the rise in US premiums. Buyers said premiums rising more than 20% would not be justified as supply and demand conditions in Asia have not changed from three months ago.
Japanese aluminum consumption typically falls in December-February as construction and beverage consumption slow.
Japanese companies also reduce purchase volumes ahead of the end of their fiscal year in March to keep raw material inventories low.
Three Japanese buyers said they have asked for reduction in the January-March shipment volumes. One Japanese buyer said his company will skip the January-March shipment entirely as stocks are sufficient.
