Japan expects diecast aluminum alloy shipments to near 3-year high in May

Japan's domestic shipments of diecast aluminum alloy are expected to rise to about 43,000 mt in May as the weak yen shrinks imports from China, market sources said Tuesday.

Domestic shipments were last seen around this level in March 2010, when they stood at 43,903 mt.

Japanese secondary aluminum alloy smelter officials said their output of ADC12 alloy has surged since April as the weaker yen increased the price of imports and triggered end-users to buy locally. The currency has fallen against the US dollar to Yen 103 this week from Yen 79-80 in November.

"Orders for ADC12 increased due to less imports from China while orders for other alloys are rather stable," said Masaharu Takeda, raw material procurement manager at Summit Showa Arumi. "We are at 90% run rate currently and the May output will be the highest since the global financial crisis."

Takeda declined to elaborate on the monthly output volume or capacity. Market sources estimated their current output at around 10,000 mt/month.

Japan consumes 70,000-90,000 mt/month of ADC alloys for diecast machinery components. Locally produced alloy and imports had almost equal market share before the yen started falling, market sources said.

Local trade sources said this week that ADC12 imports from China and locally produced alloys were offered at Yen 230-235/kg ($2.25-3.40/kg) ex-warehouse -- with the imports for July-August deliveries and domestic supplies available for delivered in a week.

"Imports need to be Yen 10 cheaper," one trader said. "When prices are equal, Japanese end-users buy from local suppliers."

Yukihiko Kanou, administrative affairs officer for Nikkei MC Aluminium, said only ADC12 demand has surged.

"Output of other types of alloys that don't compete with imports, is holding stable month-on-month," Kanou said.

Nikkei MC Aluminium's ADC12 output is limited to several hundred tons a month, as it is focused on non-ADC 12 alloys, whose output is 10,000-11,000 mt/month, Kanou said.

Japan's 20 or so secondary aluminum alloy smelters have a combined output capacity up to 50,000 mt/month of alloys for diecast applications, said Shoji Matsunaga of the Japan Aluminum Alloy Refiners Association.

"It is demand [that slumped since 2008] and limited supply of scrap aluminum that is keeping the diecast alloy production from hitting full capacities," said Matsunaga.

Japan's diecast alloy production was 39,122 mt in March, compared with 52,673 mt in March 2008.