Secondary Aluminium Alloy Price Negotiation Ends with 25 Yen Up

The negotiations for the retail price of secondary aluminium alloy products for shipping in December 2005 between secondary aluminium alloy makers and customers such as die cast makers came to an end at the high price hike by average 25 yen per kilogram by the end of the previous month following overseas aluminium market price increase. As a result, the delivery prices of ADC12 to users in the market in the Kanto area around Tokyo, Eastern Japan, are 254-259 yen per kilogram as the center values following brisk aluminium alloy demand and escalating price of the raw material, which almost hit the target in the beginning of the negotiations. Since overseas aluminium price wasn’t very skyrocketing in the first half of the negotiations, the retail price increases had been around 20 yen per kilogram for the first half of last month. It is difficult for aluminium alloy makers to meet the demand of more production increase because the makers has no more capacity to produce aluminium alloy and have difficulty in securing the raw material of the product. There is likely to be the brisk demand of secondary aluminium alloy by users for the time being. The price hikes in the negotiations seem to have resulted from users’ securing the product quantity as the first priority. On the other hand, overseas aluminium price became record $2,366 per tonne. The bullish trend is likely to continue for the time being. The raw material prices in the first half of January continued to rise; the high-grade prices increased 7 yen or so per kilogram; the low-grade prices increased around 5 yen per kilogram. Many of the secondary aluminium alloy makers aren’t scheduled to promote capital investment. Further, there is limited aluminium scrap generation. As a matter of fact, the makers expect some of the users’ consumption to shift to the imported alloy ingot from domestic one. In addition, they also consider purchase of Russian aluminium ingots due to the raw material shortage in fact. Secondary Alloy makers aim at their securing the product prices at 270-280 yen per kilogram in the negotiations for shipping in January.