The premium for aluminium shipments to Japan for July to September was set at $79 per tonne, down 3.7% from the prior quarter as the coronavirus pandemic collapsed manufacturing activity, four sources directly involved in the pricing talks said.

The premium has come down from $82 per tonne paid in the April-June quarter, making its fourth straight quarterly drop. It is also the lowest since the October-December quarter in 2016 and down from initial offers of $85 producers made.

Japan is Asia’s biggest importer of the light metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

The latest quarterly pricing talks began in May between Japanese buyers and global producers, including Rio Tinto, and South32 Ltd.

The negotiations, which usually end before the beginning of the new quarter, dragged on longer as buyers sought lower prices amid stagnant demand, while producers emphasised reviving orders from China where economy was picking up faster and local metal prices were higher than the LME levels, prompting arbitrage trades.

According to Japan Aluminium Association, Japan’s shipment of rolled products fell 24% in May from a year earlier, with sheets used in automobiles plunging 47%.

Japan’s import of primary aluminium ingot fell 9% in May, after dropping 6% in April, according to trade data, but dwindling demand boosted aluminium stocks at Japanese ports.

Some buyers have asked to cut supplies for the current quarter, a source at a producer said.

“Local demand seems to be still down 10-20% year on year, though it’s better than down 20-30% in April-May,” he said.

Still, most buyers said they were unsure whether they have seen the worst.

“With a spike in the new COVID-19 cases in many parts of the world, including Tokyo, we can’t say demand has bottomed out,” a source at a trading house said.