The negotiations that took place in early September 2023 in the Kanto region between prominent secondary aluminium alloy producers and raw material wholesalers have brought to the forefront a significant trend. This trend signifies a consecutive second rise in the purchase price of aluminium raw materials, with prices reaching a peak of JPY 5 per kilogram, as reported by our source from Japan. This upward price trajectory can be traced to a combination of crucial factors.
An urgent need for manufacturers to secure their procurement of aluminium raw materials is driven by a pronounced imbalance between supply and demand. This scarcity is further compounded by a shortage of aluminium raw materials, intensifying the pressure on prices.
Additionally, the substantial increase in the cost of aluminium ingots has significantly driven up prices. As of the beginning of September, aluminium ingots were being traded at around JPY 380,000 per tonne. This upswing in prices can be attributed to the sustained performance of the global aluminium market, as well as the weakening of the yen and the strengthening of the dollar. With these shifting market dynamics, manufacturers have had to raise purchase prices to maintain a reliable and uninterrupted supply chain.
Furthermore, it's important to mention that market disturbances have been infrequent, often linked to reduced production capacity in August due to summer vacations and extreme heat. This diminished capacity has contributed to fewer market incidents, underscoring the significance of ensuring a reliable supply chain through price adaptations.
Received under the content exchange agreement with SteelMint
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