Japan Primary Aluminium Indicator Continues to Lower in Jan-Mar

Japanese primary aluminium ingot price, the quarterly indicator for domestic aluminium rolled product prices, will decrease by 30 yen to 220 yen per kilogram for January-March compared with the price in October-December, based on three-month fluctuation of offshore primary aluminium market price for September-November. The price decreases for two quarters in a row. This is the first two-quarter price down since April-June 2009 in aftermath of Lehman Shock.

Rolled aluminium products dealers around Tokyo are concerned about reflection of two-quarter primary aluminium price down on their reselling prices. In September when primary aluminium price decrease was determined for October-December, the dealers reduced the reselling prices ahead of the actual price down in and after October. However, this time, the dealers hold much inventories purchased along the primary aluminium price at 250-270 yen per kg. Advanced price down would merely generate loss, say several dealers.

The primary aluminium price was 240 yen per kg in January-March 2011 while the price increased to 250 yen in April-June and 270 yen in July-September. In October-December, the price decreased to 250 yen. In early September, the dealers could reflect the price downturn on their reselling prices in advance when their inventories were purchased mainly in April-June or before then. There was little concern to post loss with low-cost inventories, said a dealer source.