The premium for aluminium shipments to Japanese buyers for October to December was set at US$99 a tonne, down 33 per cent from the previous quarter, reflecting weak demand and ample inventories, five sources directly involved in the pricing talks said.
The figure is lower than the US$148 per tonne paid in the July-September quarter and marks a fourth consecutive quarterly drop. The premium is below US$100 for the first time since the October-December quarter of 2020.
It is also lower than producers' initial offers of US$115-US$133.
Japan is Asia's biggest importer of the light metal, and the premiums for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange (LME) cash price set the benchmark for the region.
The latest quarterly pricing negotiations began in late August between Japanese buyers and global suppliers, including Rio Tinto and South32.
The lower premium reflected a series of delays in the recovery of automobile manufacturing because of a global shortage of semiconductors.
"With repeated delays in the production recovery by automakers and increasing stockpiles, buyers have sought lower premium levels than our initial offer," a source at a producer said.
Higher local inventories also underline an oversupply situation and have fuelled concerns of a global economic slowdown, a source at an end-user said.
Aluminium stocks at three major Japanese ports rose 9.8 per cent to 399,800 tonnes at the end of August from 364,000 tonnes at the end of July, according to Marubeni Corp. That was the highest since November 2015.
"Spot deals that have been done at below US$100 a tonne in recent weeks also forced the producers to make a compromise," a source at a trader said.
The sources, who were directly involved in pricing talks, declined to be identified because of the sensitivity of the discussions. REUTERS