"Spot aluminium premiums for CIF Korea have been rising to $55 a tonne over London Metal Exchange (LME) cash prices from about $45 a month ago," said a trader with Aluminium of Korea Co Ltd.

Supplies were short in the region because some buyers had not contracted for enough first quarter material in negotiations last December, traders said.Importers in South Korea, Taiwan and China had been reluctant to commit because of uncertainties over the regional economy, a trader at LG International Corp said.

As a result, Australian producers sold a substantial volume of their aluminium to the United States and Europe on term deals, the trader said.Low inventories have added to the pressure.

Regional aluminium rolling mills and extrusion makers, seeking to cut costs as Asia's Financial crisis deepened, have reduced their stocks by as much as 50percent.

Koralu has tried to maintain an average of 5,000-6,000 tonnes of aluminium in stock each month since the second half of last year, compared to about 10,000 tonnes early last year, the Koralu trader said.

Taiwan spot premiums have climbed by about $20-$25 a tonne to $55-$60 over a short period and end users are seeking the metal from any available sources, traders said.

"If you can get it for less than $50 (tonne), let me know and I'll buy and immediately sell it for more," a regional trader said.

Taiwan traders said the price spike was temporary.

They expect supplies to begin flowing back from Europe and the United States in the next one to two months, attracted by high Asia premiums.

But traders elsewhere in the region were not so optimistic the squeeze would ease soon.

Premiums in China and Hong Kong were also rising, although not as strongly as in Taiwan, traders said.

In China, premiums on CIF Shanghai material have risen by $10 a tonne to $65 from a month ago in line with strongpremiums in neighbouring countries, a Korean trader said.

Japan has bucked the trend. Premiums for spot delivery there have barely changed at $35-$38 a tonne in January from a month ago, traders in Tokyo said.

"There has been no change in Japanese aluminium premiums, but sentiment here is better than before," said a trader at a Tokyo-based European metal firm, noting growing perceptions that Japanese demand and prices would pick up soon. At 0650 GMT, three-month LME aluminium prices were traded at $1,204/$1,208 a tonne on Friday, hovering above a fresh five-year low.