n° 154 – May 2018

The retaliatory 25% tariff on aluminium scrap imported by China from the USA, mainly comprising Zorba, and the US Department of the Treasury’s sanction on UC Rusal have seriously affected the aluminium market in Japan.

China imported around 618,000 tons of aluminium scrap from the USA and some 362,000 tons via Hong Kong last year, the majority of which was used for aluminium alloy export without any duty under “processing trade”. However, some was used for local sales of aluminium alloys under “ordinary trade”. Following China’s 25% import tax, major Chinese aluminium smelters which have “processing trade” licences have started to change the customs formalities from “ordinary trade” to “processing trade” to avoid any tariff and have made more offers of ADC12 aluminium alloys to the Japanese market at competitive prices. As a result, ADC12 prices declined by US$ 30-40 per ton in April despite LME aluminium prices climbing sharply.

Meanwhile, Japan imported around 300,000 tons of primary aluminium (P1020 and value-added products such as billets and foundry alloys) from Rusal in 2017. The Japanese spot premium for primary aluminium has increased to US$ 180-200 per ton from US$ 100-110 in mid-April because buyers and traders continued to cover lost aluminium from US sanctions on Rusal. But when the US Treasury Department eased its sanctions on Rusal in late April, the premium was down to US$ 160-180 per ton from a three-year high.

Also in April, Japan’s car sales increased by 3.2% year on year to around 366,000 units and demand for aluminium alloy remains steady. According to the Japan Aluminium Alloy Refiners Association, aluminium alloy demand during the April 2018-March 2019 fiscal year will rise 0.3% to 1.69 million tons owing to positive momentum in the automotive and other export industries.