Japan Primary Al Quay Inventory Expands in Dec

Primary aluminium inventory at Japanese quays exceeded 300,000 tonnes for the first time since January 2006. The inventory reached 316,300 tonnes at the end of December 2008, which increased by 16.5% or 44,800 tonnes from a month ago with the demand decline from domestic re-rollers.

The inventory increased by 16.6% to 145,800 tonnes in Yokohama, by 17.1% to 157,500 tonnes in Nagoya and by 8.3% to 130,000 tonnes in Osaka. The inventory expanded by more than 10,000 tonnes at each quay in a month.

A Japanese trader gives 2 analyses. One is that the quay inventory includes ingot that Japanese traders contracted in 2008 expecting the spot demand. The other background is that domestic aluminium users, mainly re-rollers, are suffered from lower product sales and operations. There are massive ingots at quays which were long-term contracted by domestic users through traders.

Japanese traders are skipping spot procurement in January to advance inventory adjustment. Ingots contracted in December 2008 will arrive at quays this month. A trader source said quay inventory is expected to continue increasing for another month at least.