Market trends of imported aluminum alloy ingot D12 & 5M2

2015/08/06

Continuous drop in LME aluminum price has put pressure on secondary aluminum alloy market. It’s only August, but the quarterly price for October-December (4Q) has already started to be concerned about.
LME aluminum price in cash fell below $1,600/t to $1,564/t on 3 August, a new 6-year low since July 2009. Also, copper price dropped to the lowest level in 6 years. Significant price drops have been seen in the metal market by and large in this boiling hot August.


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While the demand for secondary aluminum alloy from main consumer, automobile industry remains below year-before levels, the demand for Japanese D12, which has increased slightly as imported alloy substitute, remains unchanged or below a little year-before levels.

Japan Automobile Manufacturers Association Inc. announced on 30 July that the domestic automobile production was 811,864 units in June, a decrease of 5.3% compared to the same month of the previous year. Year-on-year losses have registered for 12 consecutive months. In line with this decrease, the domestic aluminum alloy production also remains below year-before level over the past 9 months and its shipment remains below year-before level over the past 17 months.

Domestic demand for secondary aluminum alloy has been weak and the price remains at a low level, but the amount of imported secondary aluminum alloy ingots has not decreased from China and Russia, who have lowered their offer prices to the level of Japanese domestic market.
Currently, Chinese ADC12 of A group level is offered at $1,850-1860/t CIF Japan and that of B group level is offered at $1,830-1,840/t CIF Japan.
Russian standard AK5M2 (Zn1% min) secondary aluminum alloy ingot is offered at $1,630-1,640/t CIF Japan.
As to CIF Japanese ports, Chinese ADC12 of A group is at JPY244/kg, that of B group is at JPY238/kg and Russian 5M2 is at JPY212/kg.

According to the Japanese statistics of foreign trade, Japan imported 28,972 tons of secondary aluminum alloy from China in June (average unit price was JPY243/kg), which increased by 3.4% compared to the same month of the previous year. However, the imported volume has been clearly below the level of 30,000 tons which had continued from last summer to February this year.

The country imported 21,722 tons of secondary aluminum alloy from Russia in June (average unit price was JPY241/kg), which was down by 11.8% from the same month of the previous year.


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It is said that China is struggling to respond to declining Japanese market.
In addition, raw material zorba has recently become difficult to obtain. In the U.S., supplier country of zorba, a lower operating rate of shredders caused by ferrous scrap price drop led to a fall in zorba output. However, the price of zorba (Al93%) exported from the U.S. to China dropped to $1,440-1,460/t down by about $20/t from the previous week.

Primary aluminum likely to drop below $1,500
As further drop in oil price (below $40) is expected, LME aluminum price is more likely to drop below $1,500. As a result, further drops are expected in the prices of Chinese and Russian secondary aluminum ingots.
Although secondary aluminum alloy manufacturers have already expected demands and prices for October-December, current market environment is less likely to bring about an excellent recovery in the industry.

(Edited by Sasaki)

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