Japan Q1 aluminium premiums hiked to 14-year high

* Japan Q1 aluminium premiums raised to $128-$130/tonne * In line with expectations as sellers cite tight supplies By Miho Yoshikawa TOKYO, Dec 17 (Reuters) - Japan's primary aluminium buyers have agreed to roughly 7-13 percent hikes in premiums for the first quarter of next year, to a 14-year high, industry sources said on Thursday. The bulk of the premiums for January-March are from $128 to $130 a tonne, the sources said, in line with expectation and up from $115-$120 for the current quarter as sellers cite supply tightness. Premiums are charges paid by the consumer, on top of the LME cash price , to cover the costs of shipping and delivering the metal. "If the company is geared towards exporting, then higher premiums may not be quite so painful, but it could be a problem for aluminium makers whose customer base is the domestic market, such as the construction or food industry," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting. Japan's apparent demand for aluminium has finally recovered close to levels seen before the economic crisis at the end of last year, but could slow or even dip again next year if the country's fragile economy stalls. Trading sources said that a few agreements were reached at $125, which is believed to be the lowest level agreed for the first quarter. That premium is believed to account for small volume, and the seller may not have a major miner, some sources said. At least some agreements were done at $133 to $136, but again for a small volume. "Roughly 80-90 percent of our deals were done at either $128 or $130," a trader involved in the talks said. Other traders said their agreements largely fell between the two figures. Premiums for physical aluminium are rising in Europe as much of the record high inventory in London Metal Exchange warehouses is tied up in financing deals that are not likely to be suddenly unwound. Aluminium on the LME ended up $43 at $2,276 a tonne on Wednesday, near a 14-month high struck this week. Fears that Russia's UC RUSAL, the world's biggest aluminium producer, would not provide supplies caused Japanese buyers to rush to secure metal even at the cost of paying a higher premium in the third quarter of 2009. Traders say RUSAL did after all supply some aluminium to long-term Japanese buyers in the third quarter. Reflecting the slump in Japan's aluminium demand this year, imports of the metal in January to October fell to 1.07 million tonnes, down 33.6 percent from the same period in 2008. However, imports from Russia plunged by a sharper 46.7 percent year-on-year, government data shows. (Editing by Michael Urquhart)