Bulk of Japan Q4 aluminium premiums set at $115

TOKYO, Sept 11 (Reuters) - The bulk of Japan's term premiums for fourth quarter aluminium have so far been agreed at $115, a 14-year high, although some deals are believed to have been sealed at even higher levels, sources from Japan's metal industry said on Friday. Some firms were continuing talks with producers on primary aluminium ingots to be supplied in October-December in a last-minute bid to get lower prices, although most players said premiums were unlikely to drop below $115. [ID:nT64896] "Our agreements so far have only been at $115 ... and there are few left to negotiate," a trader with a large buyer said. He added that his company did not plan to pay any premiums above $115. Japanese industry officials initially balked at paying a three figure premium for aluminium at a time when domestic demand, though showing signs of recovering, remains weak as the world's No. 2 economy slowly crawls out of a recession. [ID:nT287585] Demand for aluminium in Japan slumped from late last year as automakers and other major manufacturers were forced to cut production, drastically reducing metal use. An official with an end-user pegged premium levels at $115-$120 with most done so far at $115. "I don't think a premium below $115 is possible ... and it remains to be seen at what levels remaining premiums will be agreed at," he said. The chances of achieving a premium below $115, itself already up over 50 percent from the Q3 term premium, appears slim given tight regional supplies of the metal. The Q3 premium was mostly agreed at $75 per tonne over the London Metal Exchange cash price, including insurance and freight costs. At the upper end there were also some reports of a deal done at $128, but industry officials said that there were probably conditions attached to this agreement that made it necessary for the buyer to pay an extra premium. (Reporting by Miho Yoshikawa; Editing by Joseph Radford)