COVID-19 impact: Japan's UACJ holds back domestic production of Aluminium products

UACJ, the Japanese manufacture of aluminium products has downsized its production at its domestic plants in response to the plunge in demand, especially from the auto industry, due to the Covid-19 epidemic.

On 19^th May’20, UACJ stated it has ceased part of its domestic production for several days as a course of action to adjust to a fall in aluminium products demand caused by the Covid-19 outbreak since April’20. Demand from vehicle-related industries significantly weakened in May’20 in line with output suspensions at domestic assembly plants.

The automakers of Japan were forced to shove domestic production post supplies of auto parts from China were suspended after the later period of January’20 by strict quarantine measures taken to combat the coronavirus outbreak. The production slash has intensified in the wake of a slump in Japanese and global vehicle sales. Toyota has projected a 20-22% drop in global car sales during the April 2020-March 2021 fiscal year.

UACJ said: “The Covid-19 impact was minimal on-demand for manufacturing of daily necessities, including beverage cans, during April. We continue to monitor the impact on demand from travel restrictions imposed under Japan's state of emergency, particularly during the country's traditional "golden week" holidays between 24 April and 6 May.”

The Japanese government last week lifted emergency restrictions in most of the country, except for the main consumer areas of Tokyo and Osaka.

The company's 2019-20 sales of rolled aluminium products increased by 5% from a year earlier to 1.2mn t, lifted by demand growth for beverage cans output and firm overseas sales. The export sales rose by 13% to 669,000 tonnes out of the total but domestic sales fell by 4% to 483,000 tonnes.

Japan's economy has entered a recession following two consecutive quarters of negative growth. But it is projected to shrink further by more than 20% for April-June compared with January-March, potentially the worst contraction since World War ll.

UACJ has also diminished operations at their extruded products plant in Thailand in response to feeble auto sector demand but has maintained normal operations at other plants in China and Southeast Asia. The company earlier decided to exit an extrusion venture in Indonesia by the end of June’20.

On 18^th May’20, the company recommenced operations at UACJ Automotive Whitehall Industries, its US aluminium mill subsidiary in Kentucky, after it’s shut-down in late March’20 as a preventative measure to combat Covid-19 infections. The other US subsidiary Tri-Arrows Aluminium is operating normally.