Premiums for Q1 aluminium seen rising in Asia

* Aluminium premiums for Q1 next year seen rising # Offers at $120-$130 for non-Western, Western grades By Polly Yam HONG KONG, Nov 3 (Reuters) - Primary aluminium for delivery in the first quarter of next year is being offered at higher premiums than this quarter, indicating physical supplies remain tight for coming months, traders said on Tuesday. Strong premiums of the primary metal, used in everything from cars and window frames to computers and airplanes, could cut China's imports after this year's record inflows and encourage Chinese plants to export duty-free semi-finished aluminium products to other Asian users. Primary aluminium ingots have been offered at quarterly premiums of around $130 over cash London Metal Exchange prices for Australia origin and about $120 for non-fixed origins for delivery in the first 3 months next year to ports in Hong Kong, China and South Korea, traders and buyers said. That is higher than $115 that Japanese buyers have paid for this quarter, an already 14-year high quarterly premium that is seen as the benchmark in Asia. "We don't have much metal to offer," said a trader at a large supplier of good Western aluminium. He added that buyers from Japan and South Korea were trying to secure metal for the next quarter following supply tightness in the current quarter. Tight supply has supported premiums for spot metal in Asia in the past few months despite record LME stocks, of which two-thirds may be tied up with financing contracts and not available in the spot market. Spot aluminium was trading at premiums of $130-$140 in Korea, traders said. Premiums for China delivery were lower following a collapse of the arbitrage to buy from the LME and sell into the domestic market. A wide open arbitrage had driven record inflows to China in the first half of the year. Buyers in Taiwan, Hong Kong and China are not keen to commit to high premiums for the coming quarter given there is abundant supply inside China, the world's top aluminium producer. "We will not buy at $130," a purchasing manager at a large products plant in Taiwan said, who said he had paid premiums less than $100 in average for its aluminium for this quarter. A manager at a fabricating plant in Guangdong said some Chinese fabricators might be interested to conclude deals for the next quarter at premiums of $110-$120. "If the premiums are higher, fabricators would prefer to buy in the domestic market," he said. Fabricators were also mulling the export of more plates made from primary aluminium and aluminium alloy to other Asian markets to take advantage of strong metal premiums, the manager said. Exports of aluminium plates are subject to a 15 percent tax rebate and do not carry export tariffs. Primary aluminium ingots are required to pay a 15 percent export tax. (Editing by Michael Urquhart)