The spat between Japan and China over the East China Sea islands was hurting both countries' economies and the effects of this dispute has begun to trickle down to impact various industrial sectors, including the aluminum market.
Industry sources said that the declining sales of Japanese cars and electronic appliances in China were affecting Japanese manufacturers, the Chinese metal suppliers and others down the supply chain. The current slowdown in Japanese car sales in China has lowered demand for ADC12 aluminum alloy which is used for car engines.
A diecaster in Japan said that Japanese automakers' China output over October and November was roughly half of planned levels. Most have not decided for December. They are monitoring the sales trends and signs change everyday. While most Japanese diecasters in China are seeing a sharp fall in orders like the automakers his company was less affected as its Chinese plant exports to Japan.
The slowing car sales in China affected diecasters in Japan as they export components to China. They see a 10% to 30% cut in demand from before the spat while waiting for more elaborate data from the automakers.
A secondary aluminum smelter said that it is not just the China impact but slowing car sales in Japan due to the end of the government subsidies for fuel efficient car purchases in September and declining consumer spending worldwide have impacted Japanese diecasters.
The spot price of ADC12 used for diecasting exported from China has dropped since end September and Japanese traders and Chinese producers both cited slow demand. Chinese ADC12 accounts for roughly 30% of Japanese consumption.
Japanese trader said that import prices are pressured lower as they compete with Japan's domestic ADC12 supplies that account for around half of the country's demand. Domestic prices are around Yen 180 per kilogram and my customers are taking it easy. They can buy any time there is plenty of supplies.
ADC12 alloy contains up to 12% silicon which Japanese smelters import from China as there is no local production. A silicon metal trader said order volumes for 98.5%-553 grade silicon were down by around 10% from his previous expectation. Smelters want to keep stocks as low as possible as they don't know what to expect.
Sources said that the spot price of 98.5%-553 grade silicon metal imported into Japan was up to USD 2,000 to 2,040 per tonne CIF Japan on October 11, from USD 1,970 to USD 2,020 per tonne CIF on September 20. The price was up reflecting the anticipated higher power costs with the winter season approaching but demand was sluggish.
Secondary aluminum smelter source said that price climbs up when buyers come into the market and falls when they go away. Offers below USD 2,000 per tonne are there again. Dwindling ADC12 alloy demand in Japan is seen to hit Chinese secondary aluminum smelters and silicon metal producers focused on sales to Japan.
A Tokyo trader said that the smelters have been operating in a difficult environment since the 2008 global financial crisis and the middle-sized 5,000 tonne per month smelters are discussing whether they should be in this business next year or not.
Source - Alu.com.cn
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