Japan Q1 aluminium premium hits 10-year high on stronger overseas prices

• Q1 premium climbs to $228/T, highest since Q2 2015
• Jump marks 4th consecutive quarterly increase
• Negotiations took a month longer than usual

TOKYO, Jan 24 (Reuters) - The premium for aluminium shipments to Japanese buyers for January to March was set at $228 a metric ton, the highest in about 10 years, driven by supply fears amid stronger overseas premiums, five sources directly involved in pricing talks said.

The figure is higher than the $175 per ton paid in the October-to-December quarter and marks a fourth consecutive quarterly increase and the highest since April-June quarter in 2015.

Still, it is below initial offers of $230 to $260 per ton made by global producers.

Japan is a major importer of the light metal in Asia and the premiums PREM-ALUM-JP for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange (LME) cash price CMAL0 sets the benchmark for the region.

Japan's domestic demand remained sluggish, but concerns over tighter supply amid higher U.S. premiums, tied to a potential tariff increase on aluminium imports from Canada and Mexico by U.S. President Donald Trump, have pushed premiums higher in Asia as buyers move to secure the metal, a trading house source said.

Higher premiums were also supported by worries over China's removal of a 13% export tax refund for aluminium semi-manufactured products from Dec. 1. This could boost ingot demand from Asian rolling mills outside China to produce semi-finished products, another source at a global producer said.

"We have already received some inquiries for additional supply from Asian customers," the source added.

Meanwhile, aluminium stocks at three major Japanese ports AL-STK-JPPRT rose to 323,600 tons by the end of December, up about 13% from the previous month, according to Marubeni 8002.T. The increase reflected slow domestic demand from automakers and construction segment, the first source said.

Quarterly pricing talks began in late November between Japanese buyers and global suppliers including Rio Tinto RIO.L, RIO.AX and South32 S32.AX.

The negotiations took about a month longer than usual to conclude, with some producers and buyers settling at $228 in mid-December, while another producer pushed for a higher level, according to the sources.

The sources declined to be identified due to the sensitivity of the matter.

Japan buyers agree to pay Q1 aluminium premium of $228/T - sources nL3N3OI09S