Aluminum stocks at Japanese port of Fushiki Toyama swell to 41,000 mt

Stocks of primary aluminum at the Fushiki Toyama port in northeastern Japan swelled to a record high of 41,000 mt at the end of September, a 24.2% increase compared with 33,000 mt a month earlier, Japanese sources said Wednesday.

Stocks increased as Japanese trading houses and end-users built up inventories on the back of plans by Indonesia's Inalum smelter to discontinue monthly shipments to Japan from December onwards, trade and warehouse operator sources said.

The 225,000 mt/year Inalum smelter is a joint venture between Japanese companies and the Indonesian government. The Indonesian government will take full ownership of the smelter when the joint-venture scheme expires later this month. The last shipment to Japan will leave Indonesia in November, traders said.

Fushiki Toyama is the largest discharging port of the Inalum aluminum in Japan. Some 43,353 mt of Inalum metal was unloaded at the port in the first eight months of 2013, A total of 107,515 mt was unloaded at eight ports in Japan.

Stocks started to climb a year ago, said the warehouse operator.

Fushiki Toyama stocks have typically moved in a range of 10,000-20,000 mt, sources said. Platts was unable to obtain Fushiki Toyama stocks data for October 2012.

"This is an unusual situation. The warehouses are running out of storage capacity. The place is just flooded with aluminum," said a one Tokyo trader.

Fushiki Toyama is a minor port that does not figure in the itinerary of most cargo ships. Cargoes from the Middle East, for example, need to be reloaded in Busan or other ports to be brought to Toyama, said a second Japanese trader.

Meanwhile, consumer and trader sources said aluminum prices in Toyama have been steady despite the increase in stocks. There were low prices were heard from time to time, however, possibly from traders trying to win new businesses from Inalum users, they added.

A source at one secondary aluminum alloy smelter based in Toyama said he was offered Yen 208/kg ($2,144/mt) ex-warehouse for 20 mt to be received within the month.

"Prices have not moved for several months," the source said.

One trader said Yen 208/kg ex-warehouse Toyama was in line with the price levels in the rest of Japan, while a second trader said Yen 208/kg was too low and he would offer Yen 2-3/kg higher.