Industry Info

Higher Japanese scrap aluminum prices push buyers to alternatives

Rising scrap aluminum prices in Japan have forced some Japanese secondary aluminum alloy smelters to seek Russian feedstock, while some South Korean buyers have turned to the US, market sources said Friday.

Mixed telik deals were heard this week at Yen 135-140/kg ($1,380-1,420/mt) delivered to smelter plants, up 5-8% from a month ago. Yen 135/kg deals were mostly in the regions east of Tokyo, while Yen 138-140/kg deals were in the western part of the country.

One secondary aluminum alloy smelter near Tokyo with output around 3,000-5,000 mt/month was considering importing melted scrap material from Russia.

"I hope to secure the Russian material before Russian ports freeze, which usually happens after December," he said.

Japanese smelters typically use AK5M2 material shipped from St. Petersburg.

A Tokyo trader said he was about to close a deal for several containers of Russian AK5M2 containing 1% zinc and 0.3% magnesium at $2,060/mt CIF Japan, loading in December.

A South Korean trader said Japanese mixed telik offers were at Yen 148-150/kg ($1,510-1,530/mt) delivered to South Korea, inclusive of Yen 8/kg freight and other export-related costs.

"High grade telik generated from 5000-series [primary] aluminum alloy or ADC12 are over Yen 150/kg," the trader said.

A source at a South Korean smelter, making around 5,000 mt/month of ADC12, said he was buying several containers of US telik at around $1,400/mt.

"Japan material is too expensive -- cannot buy," he said.

Meanwhile, traders said inquiries for Japanese scrap substitutes were low, because smelters were buying cautiously.

Japanese smelters worry that if they raise aluminum alloy prices in order to pass on their higher raw material costs, customers might turn to aluminum alloy imports from China.

"Smelters have turned down some spot requests from local diecasters, and it is true buyers in northeast Japan have trouble buying," said a second Japanese trader. "But if you say you can pay Yen 240/kg for ADC12, you will have no problem securing your supply."

The Japanese trader put the local spot price at around Yen 230/kg for prompt delivery.

Scrap demand was slow in South Korea as South Korean smelters were operating below their nameplate capacities due to poor demand from the local automotive sector, the South Korean trader said.

Source: Platts