Aluminum Coil femand in Japan may slip as car sales loose steam

Bloomberg reported that aluminum coil demand in Japan, Asia’s largest importer may be flat this year failing to recover from the lowest level since 2009, as the end of a government subsidy will hurt auto sales.

Mr Shunichi Shiraishi executive officer for the aluminum sector who is also the chairman of the Japan Aluminium Association said that demand will probably stay weak after dropping to 2 million metric tons last fiscal year. In March, the group forecast demand growth of 2.8% for this fiscal year.

According to the association, shipments to domestic and overseas markets of rolled- aluminum products expanded 1.1% in the first 4 months as demand from the auto industry was offset by a contraction in sales to electronics makers. Panasonic Corporation and Sony Corporation are losing customers amid the yen’s appreciation. The LMEX index lost 2.9% this year, while aluminum has dropped 2.2%.

Mr Shiraishi said that “We are struggling to achieve our earnings target for this fiscal year. The company forecast a gain JPY 6 billion in operating profit from aluminum sales of JPY 105 billion. Our industry, as a whole, is in a tough situation.”

Japan’s exports of aluminum coil products dropped 5.4% in the first 4 months this year as the European crisis curbed shipments of electronics products from China, reducing demand for Japanese components made from the light metal.

Mr Takaki Shigemoto an analyst at research company JSC Corporation said that “Japanese demand may not grow as much as forecast because of the deepening debt crisis in Europe and a slowdown in China’s economy. When the government’s rebuilding stimulus loses effect later this year manufacturing activity may slow down, curbing consumption.”