Japan Q4 aluminium price down, buyers want more cuts

TOKYO, Aug 28 (Reuters) - Producers of primary aluminium for Japanese buyers have lowered October-December premiums by nearly 10 percent but buyers are asking for a greater cut, expecting demand to slow as car makers reduce their output. Sellers of primary ingots known as good Western aluminium offered premiums of around $79-$82 per tonne over cash London Metal Exchange prices from $87-$88 in the third quarter. The premiums were settled in mid-June and are at a four-year high. Many Japanese end-users, such as building material firms and can makers, are hoping premiums will fall to $70 per tonne or below. The fourth quarter talks began this week and are still under way, traders said. "Considering the current situation, premiums should go back to the level where they were in the first quarter," said a manager at a Japanese company, citing a bearish outlook. Premiums stood at around $65 in the first quarter. Suppliers have boosted Japanese term premiums this year due to robust demand and supply concerns. Current premiums are about 35 percent higher than in the first quarter. "We've been offered a premium of around $80-$81. That's too high. At this level, we have to cut our term purchase," said a purchasing section manager at an aluminium products maker. Suppliers expect premiums to fall at some point but are reluctant to lower their prices now given that demand is still strong and supply concerns persist. Japanese shipments of aluminium products rose 2.2 percent in July from a year earlier as hot weather lifted demand for drink cans. But the overall outlook remains weak as automakers cut their production plans and demand from the construction sector stays sluggish, metal traders said. Japan is Asia's largest net importer of primary aluminium, with demand estimated at more than 2 million tonnes a year. Traders in the Asian region closely follow Japanese quarterly premiums as they set a benchmark for the rest of Asia.