Japanese aluminum scrap markets remains bull with steady prices. As the LME prices increased during so-called Golden Week, Japan’s long holiday, the domestic primary aluminum price (NSP) also has rallied to a high for the year rising to 316 yen/kg.
The prices of high grade scraps such as 2S and 63 are on an upward trend with an increase in the NSP’s price. Japanese major sash manufactures also are taking action in raising their purchase prices. Having increased the ratio of recycled content as a man, those sash manufacture such as T Company, S Company and Y Company are increasing their purchase volume of the A sash scrap. The reason why they have started to increase the ratio of recycled content, which is frequently seen in Western beverage can manufacturers), is to promote carbon footprint. But at the same time, it seems that they don’t want primary aluminum producers to control raw material costs learning from the rising aluminum premiums seen till last year.
The Japanese biggest aluminum alloy company has also entered into the so-called Sash to Sash market. The sash scrap market has become suddenly tight.
An executive from a midsize aluminum alloy manufacturer in central Japan said, “Amid the decrease in demand for domestic aluminum products for the industries such as automobile, steel and housing, scrap generation has also decreased in various locations. The decrease in machine shop turnings generation clearly reflects the decreased production of automobile. Also, the decrease in housing starts and demand for reforms leads to decreased scrap generation in building site. Thus, aluminum scrap supply remains tight”. Briefly, the source believes that the aluminum scrap supply remains tight because the drop in scrap generation has exceeded the decrease in demand for aluminum alloy.
However, paying attention to month-end stock level of both row materials and products, the source tries not to hold stocks more than is necessary because the price is basically be on a downward trend.
LME aluminum price, which rose during the Golden Week, may drop again next week. After rising too high, the price at London dropped again below $1,900/t on May 7. Premiums significantly dropped in many parts of the world. In Korea, spot premium dropped to $200/t. In Europe, premiums have remained at the lower $200/t range for a while. Also, Japanese premium for Q3 (from July to September) will drop to the $200/t range at least.
The prices of the imported aluminum alloy ingots rose by about $20/t after the long holiday. Russian base metal AK5M2 rose to $1,850/t from $1,830/t, the level before the holiday. Chinese ADC12 has risen to $2,040/t at the moment. (Prices are by CIF Japan)
（Orie Sasaki, IRUNIVERSE）