JPN Secondary Al Users Shift to Domestic Ingot Procurement

Japanese secondary aluminium alloy users, mainly die casting makers, continue to suspend secondary aluminium alloy ingot procurement from China while start to increase spot purchasing of Japanese secondary aluminium alloy ingot. The users had increased purchasing of Chinese secondary aluminium alloy last year, whose price was cheaper than Japanese products. However, recently, Chinese ingot price surged and exceeded Japanese price widely.

Japanese major die casting makers seem to have increased procurement of Japanese secondary aluminium alloy since March with an expectation orders for die castings could recover in summer. Current demand for aluminium die castings maintains stagnant. The demand is expected to recover in summer, when Japanese automakers would narrow output reduction range, and return to about 70% level compared with the recent peak peak in 2007.

Japanese ingot traders are also likely to switch spot procurement from Chinese products to Japanese products because Japanese ingot price is now cheaper than Chinese. A trader source said they would increase purchase of Japanese ingot preparing for demand recovery in July-September.

Shanghai Sigma Metals, Chinese largest secondary aluminium alloy maker, currently offers CIF $ 1,700 per tonne against Japanese customers. The offer price surged by $ 320 (about 15%) from March and seems still rising. Meanwhile, Japanese market price was 140-150 yen per kilogram around Tokyo in March. Domestic price is widely lower than imported ingot price.