Aluminium Scrap Price to Drop in January

Aluminium scrap market around Tokyo is apparently finished the transaction in the year a week ahead of normal year. Major alloyed aluminium makers including Daiki Aluminium Industry and Summit Showa Aluminum finished operation for the year last week stopping the scrap acceptance. The scrap market is expected to decrease in early 2009 when the demand decreases due to major production cut by automakers.

The alloy makers reduced the scrap purchase price by 10-15 yen per kilogram mainly for high grade scrap for second half of December at the negotiation with the scrap dealers through last week. The scrap dealers’ transaction was few in late last week due to slow demand.

The alloy makers hold large inventory both for scrap and products when the shipment decreases under slow demand. Many makers stopped the new scrap purchase in second half of December to reduce the inventory.

A scrap dealer expects the scrap price could decrease to less than 100 yen per kg for high grade in January. The high grade scrap demand decreases due to yearly low primary aluminium ingot price, which is just more than 135 yen per kg for cash transaction without freight around Tokyo.