Osaka Secondary Al Alloy Makers to Offer Scrap Price Cut

Secondary aluminium alloy makers and aluminium scrap dealers around Osaka start scrap price negotiations for April 16-30 delivery on Monday. The alloy makers will offer the price cut by 5-7 yen per kilogram for high grade scrap and by 1-5 yen per kg for low grade scrap to reflect weak primary aluminium market price at London Metal Exchange (LME).

Domestic primary aluminium bottom price is estimated at 196 yen per kg as of Friday, 16 yen lower than the monthly average in March. LME primary aluminium price is recently decreasing while yen exchange rate is slightly strengthening against US dollar.

Local market price of new cutting aluminium scrap, the main item among high grade aluminium scrap, was 157-162 yen per kg in the first half of April. The price is estimated to decrease to 152-157 yen along with the current primary aluminium market price. Local secondary aluminium alloy makers are likely to offer the same price level against scrap dealers.

Some alloy makers have already lowered their purchasing prices by 5 yen per kg for high grade scrap and by 3-5 yen for low grade scrap in the second week of April in advance. They may request additional price cut against scrap dealers if primary aluminium price continues to weaken.

As for low grade scrap, one local secondary aluminium alloy maker told it may be difficult to secure enough volume of scrap if they reduce the purchasing price by more than 5 yen per kg. Generation volume of low grade aluminium scrap maintains small. Moreover, import volume of low grade scrap is decreasing since yen exchange rate has sharply weakened since February.