Dec. 8 （Bloomberg） -- Aluminum buyers in Japan, Asia’s largest importer, won a cut in premiums charged by producers for the fourth straight quarter as the fee dropped to the lowest in 18 months on a slowdown in the nation’s export-led recovery.
Premiums for the three months ending March 31 were set at $112 a metric ton over the London cash price in transactions agreed so far, declining from $116 to $118 this quarter, said executives involved in the negotiations who declined to be identified because the talks were private.
Japan is losing its main engine for growth as the yen’s 10 percent advance against the dollar this year threatens exports, which have led the nation’s recovery from its deepest postwar recession. Industrial production dropped for a fifth month in October as the effect of the government’s stimulus fades.
“Reduced support from the government is having a negative impact on metal consumption in Japan,” said Tomomichi Akuta, analyst at Mitsubishi UFJ Research & Consulting Co. in Tokyo. “The market is also curbed by ample supply as exports from Russia and the Middle East increase.”
Japan’s shipments of rolled-aluminum products grew at the slowest pace in 11 months in October, or 5.8 percent annually, as demand from the auto industry weakened after the government ended subsidy payments for low-emission cars on Sept. 8.
Premiums have been retreating after reaching $125 to $130 in the first quarter, the highest level in at least 14 years. The fee will drop to the lowest level since the third quarter of last year, when premiums were set at $68 to $75.
Japanese buyers pay a premium in addition to the London Metal Exchange cash price to cover freight and insurance and to reflect regional supply and demand. Some first-quarter transactions are still being negotiated with bids at $110 or below, the executives said.
--Editors: Jarrett Banks, Matthew Oakley
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