DAIKI to Continue Output Reduction of Secondary Al in February

DAIKI Aluminium Industry, Japanese largest maker of secondary aluminium alloy, will continue output reduction of RSI (re-melted scrap ingot) in February. In February the firm seems to reduce RSI production by around 40% from the monthly average output in 2007 while decreasing the output by 30% in January. The firm is suffered from worse profitability of the aluminium can recycling business when UBC (used beverage can) price keeps high which is the main material for RSI.DAIKI has integrated RSI production into Shirakawa plant in Fukushima, Japan and reduced output at Kameyama plant in Mie, Japan in January. However, the firm could not improve the profitability of aluminium can recycling business when UBC purchasing cost stayed high while RSI selling price largely declined. Secondary aluminium alloy makers are currently purchasing UBC at as high as 185-190 yen per kilogram. On the other hand, RSI selling price dropped down when domestic primary aluminium price hit the lowest in 2 years and 2 months last week. RSI price fluctuates along the domestic price of primary aluminium ingot. RSI users are likely to approve DAIKI’s output reduction in February. Demand for RSI usually increases in and after March every year and DAIKI aims to restore the production in March. However, DAIKI officer said the aluminium can recycling business cannot become profitable without UBC price down by minimum 10 yen per kg. The firm might not restore RSI production volume as long as UBC price stays high.