Japan Apr Aluminium Stocks Fall 12.7 pct on Exports

19 May 2009 • by Natalie Aster

Japan's aluminium stocks fell in April on the month for the second time in a row, losing 21 percent from February's 10-year high, as fabricators neared the end of a run-down in stocks and exports rose.

Aluminium stocks held at three major Japanese ports amounted to 295,600 tonnes at the end of April, down 43,000 tonnes or 12.7 percent from the previous month, trading house Marubeni said. It is the lowest figure since November.

"Many firms really worked hard on cutting inventories, and I think we are beginning to see the results of that now," said an official with an end-user of aluminium, adding that February or March could have marked the worst of the demand slump.

Japan's shipments of aluminium products in March were up 10 percent from February when they hit a 26-year low, in one sign that demand may be stabilising. [ID:nT82799]

To see aluminium port stocks, click on: http://graphics.thomsonreuters.com/059/JP_ALIMP0509.jpg

Stocks held at these ports ballooned to 374,600 tonnes at the end of February, the highest figure since September 1998, but fell a month later as Japan bought less of the metal due to a slump in demand, while stepping up exports.

Marubeni compiles data from the ports of Yokohama, Nagoya and Osaka.

Traders said domestic demand for aluminium remained weak, hurt by output cuts by automakers, a top consumer, as well as by less demand from the construction and packing industries.

"The decline can be attributed to exports to neighbouring countries, such as China, and less imports," said an official with Marubeni Corp <8002.T>, which provides the data.

But aluminium demand for some items such as cans has been steady, prompting his firm to look at buying fresh metal, after months of drawing down stocks, the end-user official added.

"I think, however, that we have still some ways to go in terms of anticipating solid demand. We have just managed to work down some stocks," he said.

News from the auto industry remains bleak.

Just last week, Toyota Motor Corp <7203.T> -- the world's top car maker -- said it would be selling about 1 million fewer vehicles this year when it announced a larger-than-expected annual loss. [ID:nT285085]

Higher exports have also helped shrink stockpiles.

Japanese government data shows Japan exported 3,110 tonnes of aluminium metal in March -- topping all of calendar 2008 when shipments amounted to 2,001 tonnes -- almost all of which was shipped to China.

To see Japan's aluminium exports and those to China, click on: http://graphics.thomsonreuters.com/059/JP_ALEX0509.jpg

Industry officials could not say whether Japan has ever exported more aluminium in a single month in the past, but the March figure appears to be the largest in at least a decade.

April export figures, which will be available at the end of May, are expected to show an increase in shipments on the month, industry officials say.

Japan's exports of aluminium are expected to fall after that, however.

The Marubeni official said Japan's aluminium exports will peter out from May when the price difference between Shanghai and the London Metal Exchange narrowed, causing the arbitrage to virtually disappear.

"It's very simple, the price difference between Shanghai and the LME shrank and it's virtually non-existent now," he said.

"The Chinese no longer see any merit in buying (aluminium)," he said.

Following are details of Japanese aluminium stocks, including month-on-month and year-on-year comparisons (in tonnes):

Yokohama Nagoya Osaka Total Apr 30 142,300 140,300 13,000 295,600 Mar 31 163,400 164,000 11,200 338,600 Feb 28 172,800 186,800 15,000 374,600 Jan 31 171,500 177,700 14,000 363,200 End-Apr 2008 93,300 99,700 14,000 207,000

Source: Reuters