Offer down 20% from Q2 level
Weak sentiment from U.S. tariffs and higher Asia supply drive lower offer
Buyers expect $100-$110/T premium
Adds details and quotes in paragraph 2, 5-10
By Yuka Obayashi
TOKYO, May 29 (Reuters) - A global aluminium producer has offered Japanese buyers a premium of $145 per metric ton for July-September primary metal shipments, down 20% from the current quarter, two sources directly involved in quarterly pricing talks said on Thursday.
The lower offer reflects weak sentiment, driven by uncertainty over demand because of U.S. tariffs and increased supply to Asia due to falling overseas premiums, the sources said.
Japan is a major Asian importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange $(LME.AU)$ cash price CMAL0 set the benchmark for the region.
For the April-June quarter, Japanese buyers agreed to pay a premium of $182 per ton PREM-ALUM-JP, down 20% from the prior quarter.
"Some buyers are reducing purchases due to the uncertain outlook for automobile production and other demand impacted by U.S. tariffs," a source at an aluminium producer said.
"Meanwhile, some supplies, including those from the Middle East, are shifting from Europe to Asia in response to declining premiums in Europe, easing the supply-demand balance," he added.
Still, buyers see the offer as too high, with the current spot premiums down to $110-120 per ton, according to another source at an end-user.
"There is a gap between the offer and buyers' expectations, which are around the $100-$110 level," the source said.
Aluminium stocks at three major Japanese ports AL-STK-JPPRT rose to 320,300 tons at the end of April, up about 3.4% from the previous month, Marubeni Corp 8002.T said earlier this month.
The quarterly pricing negotiations began late last week between Japanese buyers and global suppliers, including Rio Tinto RIO.L, RIO.AX and South32 S32.AX, and are expected to continue until later next month.
(Reporting by Yuka Obayashi; Editing by Christian Schmollinger and Sonali Paul)
((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))
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