High Import, Slow Demand to Reduce Japan Al Alloy Output in 2H

Japanese secondary alloyed aluminium makers show mixed sign for demand condition in second half of fiscal 2010 ending March 2011. Many of major makers plan same level or slight production cut compared with the first half with expectation for firm demand. However, smaller makers expect around 20% production cut due to surging import of AD12.1 and other ingot.

Daiki Aluminium Industry plans same level of production in the second half as the first half. Nikkei MC Aluminium, which is joint venture of Nippon Light Metal and Mitsubishi Corporation, plans less than 4% production cut compared with the first half level. Summit Showa Aluminum expects the production cut could be less than 10%.

The demand could decrease for automobile when subsidiary will end for eco-friendly vehicle in September. However, the major makers expect the demand could keep firm for automobile parts due to strong demand for export to North America, China and Southeast Asia.

However, higher ingot import could impact on domestic production. Japanese import of Chinese ingot hit monthly 38,000 tonnes in June and July, which was higher level than peak demand period of 2007. The higher import would reduce smaller makers’ production.

Japanese major automakers and users increase usage of imported AD12.1 ingot under higher yen rate. Japanese aluminium industry players expect cheaper imported ingot with 190-195 yen per kilogram could impact on domestic market price in October. The domestic alloy makers could suffer from lower volume and price in the second half year.