Continued problems in Japan’s aluminum alloy industry - General
Meeting of Japan Aluminum Alloy Refiners Association

2015/05/21


Japan Aluminum Alloy Refiners Association held a general meeting at the Kazankaikan in Tokyo on May 19.

Satoru Kitayama, managing director of S. S. Aluminum Co., Ltd. who newly assumed the office of chairman of the Association made a speech with a sense of crisis, “Japan’s aluminum alloy industry has two big problems of the drain of raw materials to foreign countries and the flood of imported aluminum ingot, which have put Japanese secondary aluminum alloy manufacturers under stress. Currently, 40,000 tons of Chinese aluminum ingot are imported a month. It’s too much. The number of regular association member firms has decreased from 27 to 24. We have to make this secondary aluminum alloy industry more attractive.

Yuzo Ueda, vice chairman of the Association and managing director of Fukuoka Aluminum Industry Co., Ltd. also made a slight pessimistic speech, “As the problems surrounding the industry are of great variety, we may have a lot of challenges in the future.”

Participants from aluminum alloy manufacturers exchanged their opinion at the party held just after the meeting as follows.

One of participants said, “Although it’s not for sure if the current imported ingot volume of 40,000 tons is much or little, we can’t satisfy the customer’s needs without import in Japan’s current situation. Imported aluminum ingot is vital for Japan where generation of aluminum scrap is constantly less. Automobile manufacturers are in favor of the imported aluminum ingot as is the case with the alloy manufacturers who previously had purchased imported scrap partly to put a brake on the domestic scrap price.”

Another participant who seems to be rather against import said a bit emotionally, “It may seem to be extreme, but more domestic alloy manufacturers (ADC12 ingot manufacturers) will get caught out and go bankrupt if the automobile manufacturers increase their use of imported aluminum ingot. Then, what will become of aluminum recycling? Aluminum recycling can’t be maintained without domestic aluminum alloy manufacturers.”

Another participant with a neutral opinion said, “Import would be necessary to bring it all down to earth. We can’t return the production to its state of the 2006 and the 2007 as we don’t have enough engineers now. We will have to reduce production capacity, which was decreased after the financial crisis in 2008, instead of increasing it as domestic demand for aluminum alloy will undoubtedly dwindle. Then, import will work as adjusting valve.”

Another participant commented, “China produces 6 million tons of secondary aluminum alloy, of which only 300,000-400,000 tons are exported to Japan. Amid growing demand in China, it would be difficult that China increases their export volume of the secondary alloy for Japan.”

Another participant globally thinking said, “In spite of everything, Japan is still peaceful as people working in the same industry are holding a conversation gathering at one space like this. Competition is keener in China. Price competition in hot metal (aluminum) has already started. Japan is a little less cumbersome than China.”

It’s electric furnace steel manufacturer using scrap mainly as raw material that is similar to secondary aluminum alloy manufacturer. Electric furnace steel manufacturers reap profits by purchasing raw material scrap at a lower cost.

When viewing the secondary aluminum alloy industry?
There was a concerned voice for the current deterioration of production environment such as, “Scrap has not kept prices as high as last year, rather keeping slightly weaker ones. But, it would be meaningless if the material doesn’t sell well.”

Secondary aluminum alloy industry has not only a structural problem of increased cost of raw materials and decreased price of products between now and the past, but also characteristics of the industry getting each other’s way without total cooperation amid the decreasing demand for the domestic alloy. Also, we could see it one of the problems that no molten manufacturer participates in the Association.

Stagnant industry is characterized by slower metabolism in the industry, clumps of only old partners, short-sighted way of viewing without flexibly thinking. It seems that the Japanese secondary aluminum alloy industry holds such a dilemma. However, we have to admit the sense of stagnation, which is commonly seen also in other metal material industries.

(IRuniverse Sasaki)

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