Aluminum Stockpiles in Japan Decline to 15-Year Low

Aug. 12 (Bloomberg) -- Aluminum stockpiles in Japan declined by 16 percent in July from a month earlier to the lowest level in at least 15 years as traders reduced imports following a slump in domestic demand. Inventories in Yokohama, Nagoya and Osaka ports fell to 174,200 metric tons at the end of last month from 207,600 tons on June 30, trading company Marubeni Corp. said today. That’s the smallest volume since the company, Japan’s largest aluminum importer, began compiling data in June 1995, and compared with 202,300 tons a year earlier. Japan’s producer prices fell at a record pace in July, a central bank report showed today, as oil traded lower than last year and companies required fewer materials amid the nation’s worst postwar recession. The report highlighted concern that deflation will become entrenched and hamper an economic rebound. “The outlook for overall domestic demand is still uncertain,” Koji Iida, spokesman at the association, said by phone today from Tokyo. Domestic demand hit the bottom in the February and March period and was still 20 percent below last year, he said. Stockpiles declined as trading companies and aluminum rolling mills pared purchase volumes under supply contracts this year on anticipation of worsening demand, according to Marubeni. Company Costs The costs companies pay for energy and unfinished goods declined 8.5 percent in July from a year earlier after sliding a revised 6.7 percent in June, the Bank of Japan said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for an 8.7 percent drop. The year-on-year decline in costs was the biggest since the central bank started compiling the report in 1960. From June, prices rose 0.4 percent, today’s report showed. Signs of deflation are spreading. Consumer prices excluding fresh food, the central bank’s preferred gauge of inflation, fell a record 1.7 percent in June from a year earlier. Japan’s June domestic and export shipments of aluminum rolled products dropped 21.6 percent to 158,605 tons from 202,221 tons a year earlier, the Japan Aluminium Association said July 28. The pace of decrease slowed for a fourth month after starting to decline in October. Shipments plunged 39 percent in February, the worst slump in 34 years. Aluminum for three-month delivery climbed 0.3 percent to $1,935 a ton on the London Metal Exchange at 12:23 p.m. Tokyo time. The metal has gained 26 percent this year after dropping 36 percent in 2008. A breakdown of the Japanese stockpiles data follows: =============================================================== Yokohama Nagoya Osaka Total =============================================================== July 31, 2009 94,300 67,900 12,000 174,200 June 30, 2009 106,900 87,900 12,800 207,600 July 31, 2008 91,400 98,300 12,600 202,300 (Figures are in metric tons.) =============================================================== To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net