Japanese Aluminum Alloy & Scrap Market Trends in H1 of January 2014

2014/01/17

ADC 12 Recent Market
 Celebrating New Year, the market condition of aluminum alloy and aluminum scrap continued to rise with a form of inheriting the tightness from last year. The January’s contract price of Aluminum alloy ADC 12 was around 230 yen, 2~3 yen/kg higher than December’s one. But, this was limited to minor companies. It seemed to stay within the range of 223~226 yen/kg in the quarter January~March for the major companies.
 On the other hand, OFFER price trends of import products that caused big effect to the domestic ADC market, have been raising generally around USD20 per ton since the end of December,
 Shanghai Sigma D12・・・・・・・USD2140~2160/ton (CIF/japan)
 D12 of Yiechu, Delta, etc.・・・・・USD2090~2110/ton (CIF/japan)
 Russian AK5M2 (Base Metal)・・・・USD1970~1990/ton (CIF/japan)
 LME Aluminum market is changing below USD1800, around USD1770 (3 month futures) as usual, but it is seen to be rising because of import scrap high price for Chinese D12, and seasonal factor (such as sea surface freezing) at this time every year for Russian. In exchange to 104 Yen of Yen value-based, Sigma D12 is 233~235 yen/kg, Yechu D12 is 228~230 yen/kg, and Russian 5M2 is 215~217 yen/kg.
 Domestic hot aluminum (melting) has various prices depends on destination factory, but generally seems to be +15〜25 yen for cold material D12. Russian lump is main raw material that is bought by many aluminum makers.
photo In any case, it is expected that until March, before the tax increase, automobile production will also be elated in spirits, and aluminum alloy demand will also be high-spirited, and alongside of them, raw materials inquiry will also be extremely strong. There are many speculations about how the production pace of aluminum alloy demand will also fall since April after the tax increase, the same as the expected 10% production cuts of automobile.

Aluminum Scrap Recent Condition
 Raw material scrap has gained high value of 2~3 yen/kg immediately in New Year as described above. UBC reached more than 150 yen/kg in alloy maker factory CIF price. Speculation from an aluminum scrap specialist wholesaler source said that 160 yen was difficult but 155 yen was not that hard. For Korea, there is Korea CIF with USD1500/ton for Novelis Korea. 156 yen/kg in Yen-valued. In current state, which the price of domestic open market place price has reached 148 yen, with this unit price for Novelis, the export desire kept its direction to decline. In fact, 2 major trading companies who are handling for Novelis put up some giving-up face. It is suspected that the export amount of aluminum scrap for Korea in January decreased, less than December.

*Aluminum NSP Market Change (Since Last October)


*Aluminum UBC Price Change (Since Last October)

photo2 Aluminum cans are already marked as “too expensive” by can manufacturers, and new lump idolizing is obviously continuing since last year. Major companies, such as Universal Can, Showa aluminum cans, Kobe Steel, etc. looked dropping the purchasing amount of both UBC and UBC recycled lump, and it is expected that CAN TO CAN ratio in 2013 will fall drastically. Among the Can Makers, now there is also a place, where you are currently inserting new lump with same value to UBC, about 150 yen/kg, and of course, UBC cost price of this cans maker stopped suddenly at Yen valued, 145 yen. There is no rise more than that.

CAN TO CAN Drastic Decline Speculation
 It is said in one major can company, “the ratio of 6 recycling material and 4 new lump is not changing,” but it is believed that in view of (alloy manufacturer -> canning manufacturer) sales trends of actual UBC recycled lump, and the actual raw material ratio is as being quite collapsed. Extremely said, there is also possibility of recycled material’s falling until 1 or 2.
 In addition, this is also a factor for Novelis can materials could not enter the Japanese market, but the new lump combination ratio is high, in “high-performance aluminum cans” which cleared difficult tasks, such as aluminum can for Japanese beverages now is paint elaborated by bottle can and technique, molding, and thin lightweight. If lump combination was not high, the current Japanese beverages aluminum market won’t be able to support. Therefore, Novelis can material that became the center of recycled materials, was not used in Japan.
 High recycling ratio = good to environment = high social contribution, aluminum cans market of Japan is not linked with the Western which its corporate value (stock prices) raised.
 Last year, guessing from the current cost price of USD1500, Novelis Korea that swept over UBC market of Japan is also clear that, rather than the initial momentum, profitability is fixated too much on UBC. But, even with that, Novelis has also started an annually 220 thousands tonne of factory of can materials slab, and it is seen that UBC buying isn’t needed to be stopped. And so to be heard of, because Novelis process can only use UBC, there’s no other way except to continue to buy UBC, but actual situation isn’t clear. The inside of the factory can’t be checked even by the supplier company. Furthermore, it is also said that Novelis has ever held down the cost price when the Japan market become fairly expensive compared to UBC bought from Oceania, other Southeast Asia.
 The distribution movement of scrap inside the city, has its flow wasn’t bad for either Kanto, Chubu, or Kansai area. Because the absolute amount is small, amount is limited, but the terminal trader also aluminum scrap market condition can feel peak until March from his body, or the entering to alloy maker for each land is already flowing.
 To calm down domestic market in the steel scrap industry, there is also a measure of providing several ten thousands of import scraps (*case of Tokyo Steel), taken by steel furnace makers. But in aluminum industry, the movement to increase import supply of general scraps is not quite seen at this time, as "The aluminum scrap unit price is globally high, and even suppose to provide American scraps, it needs equal to 50 days until arrival. During this time, market environment is at risk of changing."
 In either case, both aluminum alloy maker and scrap dealer have this problem until March. The alloy makers which are also scrap users, are prepared to abide the scrap high price (until the end of February), as said "Since we can't use the measure of importing, somehow we can only pick up in the country." Also because the honor student, UBC is at "best time to sell" in January and February, the amount of material will flow all right. Therefore, we expect that both aluminum alloy and scrap market at least will change to strong tone until the end of February.

The current purchasing price of aluminum alloy makers are as follows :
Yen / maker’s bottom price based per kg
 2S new cutting・・・・・・・・・180〜185
 printing plate (PSSheet)・・・・182〜187
 63 grade sash・・・・・・・・・175〜180
 52 grade alloy・・・・・・・・・167〜172
 screw included sash・・・・・・155〜158
 aluminum copper radiator (with iron)・・・・320〜335
 base metal・・・・・・・・・・213〜217
 engine casting・・・・・・・・・167〜172
 new machinery casting・・・・・172〜177
 machinery casting・・・・・・・157〜162
 aluminum Wheel・・・・・・・・・182〜190
 UBC・・・・・・・・・・・・・143〜148
 turning mix・・・・・・・・・・138〜148
 casting turning・・・・・・・・147〜152

(IRuniverse Susan)

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