Reuters reported that China's aluminum alloy exports may fall in the coming two to three months as top buyer Japan cuts imports after a massive quake forced some car plants to stop production.
Demand from Japan is expected to fall sharply as firms like Toyota Motor Company which suspended production until March 16 face problems with power supply and other infrastructure hurdles caused by the earthquake.
Honda Motor Company the latest car manufacturer to announce production stoppage after Friday's quake and tsunami in northeastern Japan killed thousands said that it would suspend all production in Japan at least until March 20.
A manager at the Chinese supplier said that aluminum alloy is used in the manufacturing of cars. Japan bought about half of China's exports of the alloy last year. A major car manufacturer in Japan said it would accept metal on the way, but delay other contracted shipments.
They have to assess demand and see which plants can produce. A large aluminum alloy producer who supplied more than 50,000 tonnes out of China's just over 300,000 tonnes to Japan last year, was unable to confirm with Japanese clients on this month's shipments.
Supplier and trading sources said that Japanese may also delay contracted primary aluminum imports, also used in the manufacturing of cars. Any delayed supplies could enter the market in Asia and push down spot premiums.
Japanese buyers had agreed to pay premiums of USD 112 per tonne to USD 113 per tonne over cash London Metal Exchange aluminum prices for the delivery in April and June unchanged from the current quarter. But spot aluminum already traded at premiums of around USD 100 in South Korea, the top spot aluminum buyer in Asia, a trader in Seoul said, who saw the premium falling further in the near term.
(Sourced from Reuters)
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