Bloomberg reported that aluminum demand in Japan, Asia’s largest importer may be flat this year failing to recover from the lowest level since 2009 as the end of a government subsidy will hurt auto sales.
Mr Shunichi Shiraishi executive officer for the aluminum sector who is also the chairman of the Japan Aluminium Association said that “Demand will probably stay weak after dropping to 2 million metric tons last fiscal year. In March, the group forecast demand growth of 2.8% for this fiscal year.”
Shipments to domestic and overseas markets of rolled aluminum products expanded 1.1% in the first four months as demand from the auto industry was offset by a contraction in sales to electronics makers. Panasonic Corporation and Sony Corporation are losing customers amid the yen’s appreciation. The LMEX index lost 2.9% this year while aluminum has dropped 2.2%.
Mr Shiraishi said that “We are struggling to achieve our earnings target for this fiscal year. The company forecast a gain JPY 6 billion in operating profit from aluminum sales of JPY 105 billion. Our industry, as a whole, is in a tough situation.”
Japan’s exports of aluminum products dropped 5.4% in the first four months this year as the European crisis curbed shipments of electronics products from China, reducing demand for Japanese components made from the light metal.
Mr Takaki Shigemoto an analyst at research company JSC Corporation said that “Japanese demand may not grow as much as forecast because of the deepening debt crisis in Europe and a slowdown in China’s economy. When the government’s rebuilding stimulus loses effect later this year, manufacturing activity may slow down, curbing consumption.”
Mr Shiraishi said that producers of aluminum foil for use in electronics components are reducing output because of a slump in sales to makers of television sets, air conditioners, solar cells and batteries. Foil shipments in the first four months tumbled 20 percent from a year earlier.
Mr Jim Lennon an analyst at Macquarie Group Limited said that Japan’s machinery orders increased more than economists expected in April, signaling that reconstruction spending is helping companies cope with the yen’s strength and the euro area’s debt crisis. Aluminum consumption in China, the biggest user, probably has risen more than 10% this year and may accelerate in the H2.
Mr Erwin Mayr senior VP and chief strategy and commercial officer at Novelis Inc said that global aluminum demand will rise as a push in the US and Europe to reduce carbon dioxide emissions and improve mileage prompts carmakers to increase use of light weight materials.
Source - Bloomberg.net
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