Reuters quoted trading house Marubeni Corporation said as imports dropped due to a slump in demand that Aluminium stocks held at key Japanese ports plunged to the lowest since records started to be kept 14 years ago.
The trading house said that aluminium stocks held at the ports of Yokohama, Nagoya and Osaka totaled 174,200 tonnes at the end of July down 16% from the previous month and 14% less than a year earlier.
A company official said that it was the lowest level since Marubeni began collecting the data in June 1995, though he said that there was no supply tightness as demand remains stuck below levels prior to the economic crisis. He said that "We believe that stocks have returned to levels appropriate to current demand."
He said that demand for aluminium, used widely in the construction and auto industries has tumbled since late 2008 as the world's No.2 economy battles its worst downturn in half a century. The previous low was 178,100 tonnes in November 2007.
The official said that "Supplies tightened then but a simple comparison of the figures does not provide a true picture of the situation as the economic conditions of the 2 periods are totally different."
He said that Aluminium stocks have fallen significantly since ballooning to a 10 year high of 374,600 tonnes at the end of February, as Japan heavily cut imports and aggressively consumed stocks. There is no doubt that the sharp reduction in imports played a major role in cutting down stocks. Stocks have fallen as supplies going out have outpaced those coming in.
Ministry of Finance data showed that Japan's imports of aluminium in January to June fell about 38% from the same period in 2008.
The decline in Japan seems to fly in the face of a rise in aluminium stocks held in London Metal Exchange warehouses, which remain near record high levels of 4.56 million tonnes.
A Japanese industry official said that however, the difference lay in the fact that global production appears to be in excess of demand with the surplus going into LME warehouses. Japan, in contrast, which has to import all its aluminium had heavily cut its purchases from overseas to match slumping demand while using up domestic stocks.
He said that the slump in demand for aluminium was global and he did not expect lower Japanese stocks to influence metal prices.
In May, Australia's Alumina Limited forecast a further 7% contraction in aluminium demand this year with most of the decline occurring in Western countries. Still, some Japanese data has shown signs of a recovery in domestic demand with Japan's aluminium shipments in June having risen 14.5% from the previous month to touch this year's high of 158,605 tonnes. Although the June figure is still down 21.6% from a year earlier, it was the fourth straight monthly increase in domestic and overseas sales, raising hope in the industry that the worst of the slump may be over.
Signs of a nascent recovery in auto demand are also a welcome development, although aluminium industry officials caution that more time will be needed for metal demand to return to levels seen before the economic crisis.
As per report, Japan's Toyota Motor Corporation plans to raise its global output target for the year to March 2010 by 3% to 6.5 million units.
