TitleJapanese domestic secondary aluminum alloy and scrap markets in late August 2015

2015/08/24

Industrial metal prices have dropped all together based on the worries over Chinese economy and the downtrend in crude prices.
The prices of copper and aluminum, which dived into new 6-year low ranges since July 2009, have edged down further.
LME aluminum prices in kind standing at $1,532/t on 18 August are enough weak to be likely to drop below $1,500/t.
Also, NSP (New Standard Price), Japanese domestic index for aluminum ingot dropped to JPY247 per kilo, a new low level since February 2014. However, it barely keeps a JPY240 level in a weaker yen which is standing at JPY125-to-the-dollar. If JPY were 75 yen-to-the-dollar just like what it used to be under the Democratic Party of Japan, the market would have been so terrible that NSP would be around JPY150 per kilo and aluminum UBC would be at JPY50 per kilo.

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Imported aluminum ingot prices also continue to decline along with the
LME aluminum prices drop.
Chinese ADC12 offer prices from A group (Alco, Delta and Ye Chiu) to Japan
dropped to $1,780-1,800/t.
Russian AK5M2 also dropped below $1,600/t to $1,570-1,580/t. Both Chinese ADC12 and Russian AK5M2 have registered a year-to-date low and plunged to a low level since July 2009 like LME prices.

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The CIF port prices converted at JPY125 to a dollar are JPY233 per kilo for ADC12 and JPY206 per kilo for 5M2, dropping to a level where anxiety would increase for the long term contract of ADC12 for the major automobile manufacturers in the next quarter.

Demand for secondary aluminum alloy continues to be at around 10% lower level than the previous year as the operating rate has not increased due to lower demand from main consumers, automobile industry.

However, domestic aluminum scrap prices other than UBC have not dropped and remained flat in general in early August due to on-going structural decrease in generation. UBC shows a surplus due to peak generating season, limitation of receiving materials by major manufacturers specialized in UBC and lower demand for RSI. JPY135-137 per kilo EXW has become accepted.

Especially, tight supply is seen in the lower grade materials such as turnings and machinery casting, which are critical for secondary aluminum alloy manufacturers.
The generation of aluminum scrap from automobiles is also low due to decreased generation of end-of-life vehicles. Despite the drops in LME prices, scrap prices have kept flat due to tight supply.

Average purchasing prices from secondary aluminum manufacturers are as follows;


(Edited By O.Sasaki)

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