Secondary Aluminum Alloy Makers Reduce Scrap Procurement in East Japan

Secondary aluminium alloy makers in East Japan are decreasing aluminium scrap procurement. for consumption in the first half of April. They hold much material inventories due to low production after Japan Earthquake. One alloy maker said the firm didn’t purchase aluminum scrap this week while the firm cautiously decides the purchase volume for next week along with alloy order acceptance volume.

Alloy makers and aluminium scrap dealers are partially concluding price negotiations for the first half of April. Some makers lowered the purchase price by 2-3 yen per kilogram for low grade scrap while another maker decreased the price by 5yen per kilogram, for all items according to several dealers.

Primary aluminum market price is surging at London Metal Exchange and yen exchange rate is weakening against US dollar. In the usual pattern, alloy makers were expected to increase the purchase price by 5-10 yen but, actually, alloy makers required slight price cut against scrap dealers since alloy demand weakened after Earthquake. One scrap dealer in Kanto area explained the price was unchanged but the purchase volume was reduced by 20%.

One major alloy maker source suggested the firm announces scrap procurement price cut by 5 yen this week to actually reduce material procurement volume. The firm decides the procurement price and volume for next week along with alloy output volume. Alloy makers can’t draw out sales volume plans for April when alloy order volume is unforeseeable. In April, alloy makers’ sales volume is estimated to decreases by 15-20% as total compared with the original plan.

Japan Light Metal Association, consisted of aluminum material dealers around Tokyo, is preparing for aluminum scrap export to Asia when the demand and selling price for aluminum scrap are declining in domestic market. One dealer source, a member of the affiliate, said the association eyes export of used aluminum can and aluminium sash at total 100 tonnes to secondary alloy makers in South Korea, Thailand and Malaysia in late April. The association may continue the joint export if Japanese market doesn’t improve.