Secondary Alloy Al Demand Improves in Tokyo

Secondary alloyed aluminium makers around Tokyo try to meet higher spot order from the users including die-casting makers. However, the makers apparently cannot meet the higher demand due to very low bid price and shortage of the raw materials. An alloy maker source said the users try to increase the cheaper domestic ingot purchase including inventory building when the import ingot price is higher than domestic level.

The users’ bid is apparently less than 150 yen per kilogram for AD12.1 alloy, according to industry source. The price is 30 yen lower than the alloy makers’ offer. An alloy maker source said the maker cannot accept the cheap order when the alloy makers’ cost increases due to low operation rate and higher raw material price.

The low level supply of aluminium scrap also limits the alloy makers’ production increase. Local 3 major alloy makers try to increase the scrap purchase when they adjusted the scrap inventory. However, they cannot increase the scrap purchase to targeted level. The scrap supply halved for sash and machinery casting grade from the averaged level in past 2-3 years due to lower industrial activity and higher export volume.

The alloy makers’ operation rate is expected to be 40-50% of peak in May, which is 5-10 percentage points higher than April. However, the cheap price and shortage of scrap could limit the production improvement.