26 OCTOBER 2012Platts
Russian AK5M2 aluminum alloy hit by slowing Japanese car sales
Edited by : AL CIRCLE
2 min read
Russia's AK5M2 secondary aluminum alloy exported to Japan have been hit by bleak automotive demand outlook for the first quarter of 2013, market sources said Monday.
AK5M2 alloy, made by re-melting engine and other aluminum scrap, is used by Japanese secondary aluminum alloy smelters as feedstock for making ADC12.
AK5M2 contains less silicon and copper compared to ADC12.
Russian producers are currently offering November spot shipments, which arrive in Japan in December-January.
Japanese ADC12 smelters showed little interest, as their productions started to fall this month on the back of Japanese automakers cutting output by 10% in October from July-September levels. Automaker output cuts followed the September 21 termination of the government subsidies for fuel-efficient car purchases.
In addition, Japanese automakers are expected to inform suppliers of their January output plan in the second week of November and the January-March plan in December.
"We are not expecting any better number. Things get worse with slowing car exports to Europe, to China, not sure exports to US are still good," said one source close to an automaker.
The ADC12 smelters want to wait until they have a better idea how much they will need to produce in Q1, traders said.
"Orders for AK5M2 [for January delivery] is 50-60% of the usual level, may be even less," said one Tokyo trader.
A second trader and one ADC12 smelter source said they were not importing because they were buying scrap from domestic scrap suppliers, who can deliver in with shorter notice of less than a month.
Japanese traders said Russian AK5M2 (1.0% zinc) is offered this week at $1,950-2,000/mt CFR Japan for November shipments, down 5% from $2,050/mt from a month ago.
"Prices have not plunged because the Russian producers peg prices to London Metal Exchange high-grade aluminum price moves. They are just fewer sellers as many sellers retreat when prices are not up to their expectation," said the first trader.
Japan has imported 151,839 mt of aluminum alloy from Russia over January-August this year according to customs data. Most of the imports are believed to be AK5M2 alloys, according to traders.
Meanwhile, one Japanese scrap trader said he was not experiencing a boost in orders from ADC12 smelters.
"It makes very little difference because orders for scrap are hit by the weakening demand everywhere," said one local scrap trader.
AK5M2 alloy, made by re-melting engine and other aluminum scrap, is used by Japanese secondary aluminum alloy smelters as feedstock for making ADC12.
AK5M2 contains less silicon and copper compared to ADC12.
Russian producers are currently offering November spot shipments, which arrive in Japan in December-January.
Japanese ADC12 smelters showed little interest, as their productions started to fall this month on the back of Japanese automakers cutting output by 10% in October from July-September levels. Automaker output cuts followed the September 21 termination of the government subsidies for fuel-efficient car purchases.
In addition, Japanese automakers are expected to inform suppliers of their January output plan in the second week of November and the January-March plan in December.
"We are not expecting any better number. Things get worse with slowing car exports to Europe, to China, not sure exports to US are still good," said one source close to an automaker.
The ADC12 smelters want to wait until they have a better idea how much they will need to produce in Q1, traders said.
"Orders for AK5M2 [for January delivery] is 50-60% of the usual level, may be even less," said one Tokyo trader.
A second trader and one ADC12 smelter source said they were not importing because they were buying scrap from domestic scrap suppliers, who can deliver in with shorter notice of less than a month.
Japanese traders said Russian AK5M2 (1.0% zinc) is offered this week at $1,950-2,000/mt CFR Japan for November shipments, down 5% from $2,050/mt from a month ago.
"Prices have not plunged because the Russian producers peg prices to London Metal Exchange high-grade aluminum price moves. They are just fewer sellers as many sellers retreat when prices are not up to their expectation," said the first trader.
Japan has imported 151,839 mt of aluminum alloy from Russia over January-August this year according to customs data. Most of the imports are believed to be AK5M2 alloys, according to traders.
Meanwhile, one Japanese scrap trader said he was not experiencing a boost in orders from ADC12 smelters.
"It makes very little difference because orders for scrap are hit by the weakening demand everywhere," said one local scrap trader.
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