Rio Tinto raises Q2 Japan aluminium premium offer, sources say

By Yuka Obayashi

TOKYO, March 11 (Reuters) - Rio Tinto RIO.L, RIO.AX has raised its aluminium premium offer to Japanese buyers to $350 per metric ton for April-June primary metal shipments, up 79% from the current quarter, due to fears the escalating Middle East crisis will tighten supply, two sources said.

The revised offer is 40% higher than Rio's previous proposal of $250 and, if accepted, would be the highest since the April-June quarter of 2015, when the premium reached $380 a ton.

Japan is a major Asian importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price CMAL0 set the benchmark for the region.

In late February, global producers offered Japanese buyers premiums of $220 to $250 per metric ton for April-June, up 13%-28% from the current quarter, reflecting higher overseas premiums.

But they pulled, or let the offer expire, as they assessed risks from the Middle East conflict to cargoes transiting the Strait of Hormuz.

"Behind the higher offer is stronger European and U.S. premiums and rising freight and insurance costs," one source directly involved in the quarterly talks said.

The sources declined to be named due to the sensitivity of the matter. Rio Tinto declined to comment.

The war in the Middle East, which accounts for around 9% of global aluminium supply, has rattled the light metal market by effectively freezing shipments via the strait.

Qatari smelter Qatalum began shutting down production and Aluminium Bahrain ALBH.BH, which runs one of the world's biggest smelters, declared force majeure on shipments.

Japan imported about 20% of primary aluminium ingots from the Middle East in 2025.

Premiums for aluminium in South Korea have increased sharply since the end of February.

Japan's quarterly pricing negotiations began last month and are expected to continue through late March.