Japan automakers' output cuts in China impact aluminum diecasters

Japanese diecasters have been hit by Japanese automakers being forced to cut production in China due to slowing sales triggered by geopolitical tensions, industry sources told Platts.

Japan's largest automaker Toyota Motor's September car sales in China fell to 44,100 vehicles, from 75,200 vehicles in August, the company said.

Toyota produced 67,600 vehicles in China in August, according to data from the company. The September output, which will be released at the end of this month, is likely to have fallen, as the company spokeswoman says some of its nine Chinese plants were "adjusted output " since the week of September 17.

Toyota and other Japanese automakers declined to disclose October output planned in China. According to Japanese diecaster and trade sources, their September-November output will halve from their plans, and are currently discussing December output.

"Automakers are monitoring sales trend in China and signs change daily," said the diecaster source.

Around 40 Japanese diecasters operate plants in China, supplying transmission and other aluminum components to the automakers.

"Our plants in China are operating, but if our customers [the automakers] reduce output, we will adjust production accordingly," said a spokeswoman for diecaster Aisin Seiki, which operates 27 plants in China.

A spokesman for Keihin that supplies components to Honda Motor said: "There is possibility of our production being impacted, although we don't know to what extent as it is just after the National Day holidays.

A spokesman for Ahresty concurred, adding that some customers in China are making orders in shorter notices of two weeks rather than a month.

Diecasters are mostly running at reduced rates tracking the automakers, but one diecaster source said his Chinese operation was affected less than his peers as his company produces components in China that are exported to Japan.

But there is also a reverse supply flow, where Japan supplies components to Chinese plants.

"Operations in Japan will be impacted too because the Chinese plants use some components made at the Japanese plants," said Keihin spokesman said.

Another Japanese diecaster source said he saw around a 10% cut in the Japanese plant run rates for October-December from their planned levels, or 10-20% cuts from July-September.

"Japanese automakers were hit by slowing car exports to Europe and now exports to China are falling," he said. All Japanese automakers, with the exception of Fuji Heavy Industries, have revised down their October-December production plans at the end of September, he added.

Japan has exported 18,059 passenger and commercial vehicles to China in August, according to Japan Automobile Manufacturers Association data.

Ahresty has started to review the impact of the geopolitical tensions on their earnings for the financial year ending in March 2013, the company spokesman said. The review will be completed by November 9, when the company announces its April-September 2012 financial results. Most other automotive makers are expected to reach a tentative analysis of the island spat impact in early November, said a third diecaster source.