The domestic aluminum alloy industry is in a complete loop of high raw material prices and low product prices.

 

With the price of aluminum alloy (ADC12) not rising easily and actual demand not growing much, aluminum scrap, the raw material, is in an inflated market condition. A typical example is aluminum wheel scrap, which is considered to be the "top toro. In the past, aluminum wheel scrap was mainly three-piece, but now it is mostly all-aluminum wheels. They have become a popular commodity because they are easy to understand, easy to handle, and can be sold anywhere, and in some cases, the price per kilogram exceeds 290 yen.

 

 

 

Environment around　Aluminum wheels:

 

1, Increased export of used cars (exported overseas with wheels still attached)

 

2, Decrease in ELVs (End of Life Vehicles) in Japan

 

3, Rise of foreign buyers and collectors

 

As a result, there is always a shortage of good products and the market price is high. Most of the wheel scrap export destinations are in China. Major wheel manufacturers in China are purchasing them as raw materials for wheels, making it difficult to compete in the price war.

 

In addition to this wheel scrap, Chinese and Vietnamese recyclers are "shredding" everything in entire Japan.

 

Sash scrap → exported as A-sash shredder.

 

Aluminum-copper radiators→Aluminum scrap and copper scrap are sold to Chinese and Vietnamese copper pipe manufacturers.

 

So, no wonder so many aluminum-copper radiators are loaded at Chinese scrap dealers. Sounds "Seasonal Delicacy"? Some of them are sold at prices exceeding 600 yen per kilogramgram.

 

As for sash-related products, B-sash presses are still priced at 230-240 yen per kilogramgram (actual price at the yard), but some of them are sometimes sold to Japanese traders when the selling price is difficult to meet even if they are shredded.

 

As mentioned several times, aluminum scrap is characterized by a high ratio of exports compared to other metal scrap.

 

Of the 1.4 to 1.5 million tons of aluminum scrap generated domestically, 400,000 tons, including UBC, are exported. As a result, the price of aluminum scrap, the raw material, has remained high, making it difficult for alloy manufacturers to lower their prices.

 

Nevertheless, in the first half of June, the largest alloy makers lowered their bid prices by about 5 yen per kilogramgram for lower grades. Others were waiting to see how things would turn out.

 

So what will happen in the second half of June?

 

In view of the soft LME aluminum market trend, ADC12 import prices, and actual demand trends, a "down" decision for raw materials would theoretically be correct.

 

LME aluminum market price ($/ton) and Chinese ADC12 market price ($/ton C&Fjapan)　

 

ADC12 from China is no longer prevailing at around $2200. Indonesian products may be less expensive than this.

 

The market is now in a commercial situation where prices are likely to be lowered due to inventory clearance sales. Trading firms are also looking to sell off their imported inventory as soon as possible, which is why prices are leaning toward lower levels. Recently, Aisin's ADC daily tenders have been priced at 300-310 yen per kilogramgram.

 

If the spread is secured, raw material scrap is definitely lower. However, alloy manufacturers who want to secure raw materials for the coming "full production" may be slightly hesitant to lower the price of scrap.

 

Although alloy makers are operating at 70% to 80% capacity now.

 

However, will the real full production period ever come?

 

As mentioned in the previous issue of "Aluminum Alloy & Scrap Market Update 2023 #11: Sluggish ADC Demand in China and Japan," automobile production itself is doing well right now (although exports of parts are not doing well). However, some people are predicting that automobile production will be reduced again from September. If the former scenario is true, it will be a good thing for alloy manufacturers, but if the latter, well......................

 

At the moment, raw material prices are completely high and product prices are low.

 

Alloy makers had a tough time making a profit from April to June, and it may be tough to make a profit from July to September as well. Will the inventory of imported ingots be cleared and the supply-demand balance of alloys return to an appropriate level in September? It depends on actual demand at that time.

 

As long as China does not impose import restrictions or Japan does not impose export restrictions, scrap inflation, pulled by exports, will continue. In addition, not only alloy makers but also rolling mills in Japan are raising the ratio of scrap used in carbon-neutral products. The battle for scrap will continue.

 

Imported ingots at low prices will also not be able to stop. It is also true that it is physically difficult to meet domestic demand for aluminum alloys without a certain amount of imported ingots. The aluminum alloy market is developing naively and sensitively like Kusamakura (written by Soseki Natsume). On the other hand, the raw material scrap industry is experiencing difficulties in generating raw material scrap from time to time, and a diversity of diversity is unfolding in the warring states picture scroll in full bloom.

 

 

（IRUNIVERSE/ＹＴ, translated by S. Aoyama）

 

 

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