Japan Aluminum Stockpiles Drop by Most in Two Years

June 11 (Bloomberg) -- Aluminum stockpiles in Japan plunged in May from a month earlier, dropping by the most in two years to the lowest level since July 2008, as domestic demand gained and traders sold surplus metal to China. Inventories in Yokohama, Nagoya and Osaka ports slumped by 17.7 percent to 243,300 metric tons at the end of last month from 295,600 tons on April 30, trading company Marubeni Corp. said today. The decrease was the biggest since March 2007, when stockpiles fell 18.1 percent to 201,500 tons. The volumes dropped for a third month from a 10-year high of 374,600 tons in February as domestic demand improved and metal was exported to China, according to Marubeni, Japan’s largest aluminum importer. Industrial output in Japan surged the most in 56 years in April as spending by governments around the world helped prop up export markets amid a global recession. China’s imports of primary aluminum rose to a record 362,400 tons in April, about four times the volume in March, as higher local prices made imports attractive. Purchases also gained as buyers replenished stockpiles needed for the country’s 4 trillion yuan ($585 billion) stimulus plan. The price of aluminum for three-month delivery climbed 2.3 percent to $1,677 a metric ton today on the London Metal Exchange and is up 14 percent in the past six days. Japan’s Demand Demand in Japan gained as carmakers and machinery producers increased output after reducing inventories. Stockpiles also declined as Japanese trading companies and aluminum rolling mills pared purchase volumes under supply contracts this year on anticipation of worsening demand amid the nation’s worst recession since World War II. Aluminum producers will increase the fee they charge Japanese buyers next quarter for the first time in a year on rising demand and reduced supply, four executives involved in the talks said. The premium will climb to $68 to $75 a ton over the London Metal Exchange cash price for the three months to Sept. 30 from a five-year low of $55 to $60 a ton this quarter, according to the executives. They declined to be identified as the negotiations were private.