UPDATE 1-Japan Q3 aluminium premiums mostly set at 6-year low -sources

(In paragraph 7 changes to Japanese buyers from refiners)

* Q3 premiums of $100 mark the steepest quarterly drop ever

* Higher inventories amid China's export push weigh

* Producers forced to cut offers from initial proposals

By Yuka Obayashi

TOKYO, July 3 (Reuters) - Japan's aluminium premiums for July-September shipments were mostly set at a six-year low of $100 as swelling Chinese exports piled more pressure on an already swamped market, five sources directly involved in the talks said.

The nearly $300 quarterly drop in premiums, the sharpest such decline ever, is in line with a global slump triggered by higher aluminium supply after the London Metal Exchange (LME) forced warehousing companies to shorten delivery times.

"Japan has been particularly hit by the global collapse in premiums as China's export of aluminium products to elsewhere in Asia pushed ingots to Japan," a trader said.

Japan is Asia's top importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the LME cash price set the benchmark for the region.

Three end-user sources and a buyer at one of the trading houses said most deals were done at $100. A source at one of the producers also quoted the same number.

But another end-user source said some deals were struck earlier in June at $90. Negotiations are still continuing between global miners and buyers.

Major producers had in May offered metal to Japanese buyers at $130-160 premiums for the third quarter, versus an April-June premium of $380 (PREM-ALUM-JP). But sharply lower spot aluminium premiums in Japan and higher local inventory forced miners to lower their offers, traders said.

Premiums around the world have more than halved from January, although they recovered slightly in June. This drop, along with weaker metal prices that hit a 16-month low in June, may put producers under renewed pressure to cut loss-making capacity.

In Japan, aluminium stocks held at three major ports rose for a fourteenth month to hit a record high of 502,200 tonnes at the end of May, doubling from a year ago, due to high imports and slow housing sector demand.

Japan's aluminium ingot imports for the year ended in March rose 15 percent from a year ago to 1.725 million tonnes, while aluminium alloy arrivals rose 6 percent to 1.141 million tonnes.

Meanwhile, China's exports of unwrought aluminium and aluminium products, including primary, alloy and semi-finished aluminium products, have risen 35 percent so far this year from a year ago.

"We think premiums won't drop further as overseas premiums are hitting floor and China will curb exports due to lower metal prices," a trader said. "But that may change if China gears up output and exports again for some unexpected reasons."

(Reporting by Yuka Obayashi, Editing by Himani Sarkar)