Tight Scrap Supply Limits Chinese Secondary Al Alloy Supply to Japan

Chinese secondary alloyed aluminium makers sold almost all offer of AD12.1 grade alloy to Japanese buyers for February and March shipment. The suppliers reduce the offer volume due to short supply of raw materials. Japanese sources of trading firms said Chinese major alloy makers offer alloy for April shipment while many smaller makers offer alloy for May shipment.

Shanghai Sigma Metals already sold out AD12.1 grade for February shipment. The firm can offer only remaining 1,000 tonnes for March shipment due to strong demand from Japan and Southeast Asia. The president Tony Huang said to a reporter of Japan Metal Bulletin the export demand is very strong. The firm plans to export 10,000 tonnes in February, of which around half is for Japan. The firm plans to export similar tonnage in March.

Mr. Tony Huang said the firm purchased around 30,000 tonnes of aluminium scrap in January while the firm uses domestic scrap at around 20% of the requirement. The firm can secure raw materials including domestic primary aluminium with cheaper price than price at London Metal Exchange.

However, smaller Chinese alloy makers are in trouble to secure raw materials. US scrap supply is still tight and the price keeps high level while the scrap generation is getting higher from the bottom. Some Chinese major alloy makers reduce the operation due to short supply of the materials. Chinese higher demand also impacts on the export volume when Chinese demand increases for automobile.