PLATTS: Japan's domestic aluminium trade may become active late August

Japan's aluminium market was quiet this week as manufacturing plants across industries closed for summer holidays, but after enduring the summer heat, traders may be rewarded with spot orders from beverage can makers at the end of the month. Rain continued to pour in Japan until the beginning of August but in the last two weeks, temperatures have risen to above 30 degrees Celsius in most parts of the country. Hot weather and holidays make a good match for beer makers, who are expecting more drinking at home. Beer bargain sales at supermarkets kicked off this week, cutting prices of beer generally by 10-15%. Beer bargain sales would have two possible impacts on the aluminium market, noted one trader. Due to discounts, higher can costs may not be recovered, while on the other hand, if sales rise, there may be additional demand for aluminium ingot. Sources at beer makers and aluminium trading firms expressed hopes that high temperatures would stay until the end of the month, and that it would stay hot and dry in the evenings when drinking begins. Beer makers have set their can procurement programs based on plans to increase their 2007 beer sales volume by around 3% from last year, when consumption was around 11 billion cans. Japan's beer shipments in January to July of this year, however, were down 2.8% year on year. Beer cans weigh 16-20 g for 330-350 ml cans, with the exception of some Guinness-type or luxuary brand products that use heavier cans. One trader said, in order to generate additional spot demand for beer cans, the Japanese need to consumed beer in packaging equating to 30,000 mt of aluminium this month; 30,000 mt translates into 1 billion cans. "I don't expect this much of an increase," the trader said, playing down the possibility of additional demand. Meanwhile, another trader was more optimistic, arguing that falling London Metal Exchange prices would encourage spot aluminium demand. The London Metal Exchange cash aluminium price fell to $2,530/mt this week, down $200/mt or around 10% from July. The trader said he was expecting can makers to buy 1,000 mt or more of aluminium ingot, possibly after the mid-August holidays, in the domestic market.