Some 1st-Qtr Japan Aluminum Premiums Settle At $112/Ton -Suppliers

SINGAPORE, Dec 09, 2011 (Dow Jones) -- Some first-quarter Japanese aluminum premiums have been settled at $112 a metric ton, down from this quarter's level of $118-119/ton as domestic demand remains weak, suppliers told Dow Jones Newswires Friday.

First-quarter charges are falling due to high stocks and lower consumption after auto makers--major consumers of the metal--cut production following flooding in Thailand that reduced parts supply, they said.

Around 20% of the volumes to be delivered in the January to March quarter have settled at $112/ton and talks for the rest of the metal are continuing, one Tokyo-based trader said.

"Producers are starting to lower their offers and buyers are still looking for lower levels," he said.

The shipping deadline for first-quarter deliveries is Dec. 15.

Suppliers tabled initial offers of $114/ton-$115/ton when talks started last week, producers and traders said at the time.

A source at a major supplier said he's maintaining his offers at $115/ton but added that it's possible premiums will settle in a wider range than the usual $1-$2 spread given the high level of macroeconomic uncertainty in Europe.

"Everybody is agreed that the situation in the euro zone is a very important factor," he said.

The persistent concerns over the European debt crisis have weighed on aluminum prices over the last few weeks, the suppliers said, forecasting further declines on the London Metal Exchange before the end of the year unless policy makers take decisive action to tackle the region's problems.

Three-month aluminium opened at $2,065/ton on the LME Friday, down 4.2% since the start of the fourth quarter.