Japan Tight Engine Supply Impacts on Secondary Al Supply

Japanese supply of waste automotive engine decreases recently around Tokyo. A trader source said the export increases for Malaysia while the supply decreases due to lower scrapped car. Domestic secondary aluminium makers cannot operate normally due to shortage of the raw materials and some makers’ operation rate is less than 50%.

A Japanese source said automobile scrap processors’ operation rate is less than 50% of normal level. The volume decreases around Tokyo due to higher used car supply to north Japan especially to damaged areas by the major earthquake along with lower domestic automobile sales.

Domestic automobile scrap processors increase the used engine export to Malaysia when the market price is higher in Malaysia than Japanese level. Malaysia is now major automotive parts hub to distribute to Vietnam and Indonesia.

Domestic secondary aluminium makers cannot secure enough raw material of used engine to keep the operation. A major maker around Tokyo purchased around 800 tonnes in July and the volume could decrease more in August while the volume was around 1,000 tonnes since May while the purchase volume usually was monthly more than 2,000 tonnes.

The maker stopped aluminium base metal shipment in late July due to thin inventory of raw material and products. The firm ships the products at limited volume only for major buyers in early August. The firm cannot make money at the less than 50% operation rate.