Marubeni sees Japan's aluminium premiums rising towards $150/T in 2016

The premiums that Japanese buyers pay for aluminium are expected to rise next year towards $150 a tonne, compared with $90 in the current quarter, due to tighter supply after cutbacks and closures by producers, Japanese trading house Marubeni said.

Japan is Asia's top aluminium importer and the premiums for primary metal shipments PREM-ALUM-JP it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

"Japanese premiums are likely to gradually climb next year and the following year as there have been and will be more inventory adjustments worldwide," Norinobu Ozawa, general manager at Marubeni's light metals section, told reporters on Thursday.

More metal is seen flowing into the U.S. market as a series of output reductions will tighten supply there, while more metal from Russia and the Middle East may head to Europe where local refiners with low cost-competitiveness may be forced to consolidate, he said.

"That means less supplies coming to Asia," Ozawa said.

Many aluminium producers have cut loss-making capacity or shut down completely as London Metal Exchange prices and physical premiums have tumbled amid rising exports of semi-fabricated products from China and high energy costs.

Marubeni, a major aluminium trader in Japan, predicted Japanese premiums, now being negotiated between the country's buyers and global producers at about $110 per tonne for January-March shipments in 2016, could rise to $120 in April-June, $130 in July-September, $140 in October-December and $150 in 2017.

Some Japanese aluminium buyers have agreed to pay producers a premium of $110 per tonne for metal to be shipped in the January-March quarter, five sources directly involved in the quarterly pricing talks said earlier this month.

Japanese premiums plunged in 2015 due to surging exports of semi-fabricated products from China, after first hitting a record high of $425 per tonne for January-March deliveries.

But Ozawa also warned of another scenario for next year if China's economic growth was slower than expected.

"If China's economic growth comes to 3 percent next year, instead of our base estimate of 6 percent, and its aluminium output is only reduced by one million tonnes, instead of our forecast of two million ... Japanese premiums could stay at around $100 per tonne."