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Japan Aluminum Stockpiles Drop to Lowest in 11 Months

Aluminum stockpiles in Japan dropped by 15 percent in June from a month earlier to the lowest level since July last year as domestic demand increased and traders reduced metal imports.

Inventories in Yokohama, Nagoya and Osaka ports fell to 207,600 metric tons at the end of last month compared with 243,300 tons on May 31 and 202,800 tons a year earlier, trading company Marubeni Corp. said today. Volumes dropped for a fourth month from a 10-year high of 374,600 tons in February, according to Marubeni, Japan’s largest importer of the metal.

Shipments of aluminum rolled products fell at a slower pace in May than in April as demand from beverage can producers and carmakers increased, the Japan Aluminium Association said in June. Prime Minister Taro Aso’s 25 trillion yen ($269 billion) in extra spending helped consumer sentiment climb to an 18-month high in June, Cabinet Office figures showed yesterday.

“After hitting the bottom in the first quarter, domestic demand has been gradually improving,” Koji Iida, spokesman at the association, said by phone today from Tokyo. Demand from carmakers improved after plunging by 70 percent at one point during the January-March period from a year earlier, he said.

Demand in Japan improved as carmakers and machinery producers increased output after reducing inventories. Stockpiles also fell as trading companies and aluminum rolling mills pared purchase volumes under supply contracts this year on anticipation of worsening demand amid the nation’s worst recession since World War II.

Exports, Spending

The government yesterday said the economy is “picking up” and upgraded its view of exports, business sentiment and consumer spending, which accounts for more than half of the economy.

Aluminum producers will increase the fee they charge Japanese buyers for the July-to-September period for the first time in a year on rising demand and reduced supply, four executives involved in the talks said last month.

The premium will climb to $68 to $75 a ton over the London Metal Exchange cash price for the three months to Sept. 30 from a five-year low of $55 to $60 a ton last quarter, according to the executives. They declined to be identified as the negotiations were private.

Aluminum for three-month delivery climbed 0.6 percent to $1,570 a ton on the LME at 10:08 a.m. Singapore time, up 9 percent from the end of May.

Shipments of aluminum rolled products fell 30 percent to 138,503 tons in May from 196,842 tons a year earlier, the industry association said on June 26. The pace of decrease slowed for a third month after starting to drop in October. Shipments plunged 39 percent in February, the worst slump in 34 years, tumbled 36 percent in March and fell 31 percent in April.

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