The Japan Aluminium Alloy Refiners Association has revised down its domestic demand forecast for secondary aluminium alloy for the 1 April 2008-31 March 2009 fiscal year due mainly to the automobile slowdown. The association Friday forecast April 2008-March 2009 demand at 1.47 million mt, down 19.1% year on year. It had earlier forecast 1.87 million mt. The association attributed the fall to automobile production cutbacks and alloy consumers destocking. Consumption cutbacks resulted in excess supply of alloys, local market sources said. Over April-December 2008, Japan produced 0.78 million mt of aluminium alloys while importing more than 1 million mt. The excess supply has forced Japanese smelters to cut production by 50% in the current January-March quarter, while spot import trade stalled. Domestic spot alloy prices have plunged as a result, falling below Yen 130 ($1.35)/kg, delivery costs and duty unpaid basis, lower than imports. According to Platts' assessments, import prices were $1,300-1,400/mt FOB China last week.
Alloy prices are even lower than silicon metal prices, the feedstock used for refining scrap aluminium. Silicon metal prices were $1,600-1,650/mt FOB China last week. Meanwhile, the association said that of the 1.47 million mt forecast, demand for alloys for diecasting, which are primarily of ADC12 specifications, were projected at 0.83 million mt, down 23.9% year on year; alloys for molders 0.27 million mt, down 16.8%; for consumption by rolling mills 0.21 million mt.