Japan Secondary Al Alloy Price to Drop in June

Japanese secondary alloyed aluminium market price is peaking recently after continuous increase since the beginning of the year. The price kept the high level in May but an industry source said the price should decrease in June. The alloy makers’ profitability could be squeezed when they have high cost raw materials inventory and still try to pass the higher cost on the selling price.

The alloy makers apparently settled the after shipment price negotiation with major buyers including die-casting makers to keep the alloy price in May as April while some buyers accepted around 3 yen per kilogram of hike. The price of AD12.1 grade is 235-240 yen including freight for small lot buyers at 120 days note transaction while some buyers pay around 245 yen. The alloy price is expected to decrease in June when the raw materials offer price decreased after offshore alloy price decreased.

The alloy makers offered more than 250 yen per kg for AD12.1 grade for May shipment when domestic base metal price reached 220 yen per kg at end of April and other raw materials cost increased. The alloy price increased by 5-10 yen at negotiation before the shipment in May when Russian AK5M2 base metal offer was US$ 2,200 per tonne and Chinese AD12.1 offer was around US$ 2,400.

However, offshore market decreased to year-low since mid-May due to uncertainty for world economy after Greece financial crisis. Offshore alloy and raw materials offer also decreased and the market mood cooled. Japanese alloy buyers sought lower price at after shipment alloy price negotiation started in late May when AK5M2 offer decreased to around US$ 2,000 per tonne and domestic base metal price decreased to around 200 yen per kg.