Japanese port stocks remain in recent range in August

Stocks of primary aluminium at Japan's major ports fell to 228,000t at the end of August from 243,200t at the end of July, according to estimates from local trade house Marubeni. It's tempting, but probably premature, to read into the monthly decline an improvement in local consumption.Domestic mill shipments rose year-on-year in July, raising expectations that an under-performing Japanese aluminium consumption sector might be improving. However, we'd want to see more data before drawing too hard a conclusion. The July shipments reading may have been a blip in an overall downtrend—it was the first "up" month since February of this year. Similarly, port stocks have done nothing more than oscillate in a 200,000-250,000t range over the last year. That seems to have resulted from a concerted effort to get them into that range after a period of being consistently above 300,000t (see chart), which was widely felt to be too high by the locals. Most pertinently, though, is the attitude of Japan's fabricators themselves. They have just negotiated another drop in the quarterly premium for Western brand metal shipments in Q4 2007—to $65-66/t over LME cash. In doing so, they argued that with the exception of the usual seasonal pick-up in beverage can sales (and even that's been relatively subdued this year), there was little reason to get optimistic about the outlook for domestic demand in the near future. Factoring the Japanese port figures into our global reported stocks figures shows a net rise of 5,925t in August with only the producer stocks figures pending. However, August stock movements have already been over-taken by the dramatic rise in LME stocks since the start of September.