Corrected: Demand from U.S. automakers could boost aluminium price -Japan industry body

Nippon Light Metal Holdings

14/07/2014 05:14

(Corrects paragraph 9 to show target is 6.5 mln T, not 650,000 
T, and that current demand is 4 mln T) 
    * Ford plans to launch aluminium-intensive truck, others 
could follow 
    * Could push aluminium price to $2,500 per T -Japan industry 
body 
    * Premiums paid by Japanese buyers are too high -industry 
group 
 
    TOKYO, July 11 (Reuters) - Prices for aluminium could climb 
around a third to as high as $2,500 per tonne if more U.S. 
automakers start producing vehicles made from the metal, said 
the new head of Japan's aluminium industry body. 
    Ford Motor  F.N  plans to launch a new aluminium-intensive 
truck this year, with speculation that other carmakers could 
start using more of the metal, which is lighter than steel and 
helps make vehicles more fuel-efficient.  ID:nL1N0OJ1IO  
    "If automakers follow Ford's step to use more aluminium, 
supply of the metal will become short and prices could rise as 
high as around $2,500 per tonne," Takashi Ishiyama, chairman of 
the Japan Aluminium Association, said on Thursday. 
    He said that association members such as producers of rolled 
aluminium would be able to pass on a gradual increase in prices 
to their customers, and that they would welcome the chance to 
use current inventory to make products they could sell at higher 
prices. 
    London Metal Exchange aluminium prices  CMAL3 , which hit a 
13-month high earlier this week, stood around $1,900 per tonne 
on Friday. 
    Ishiyama said that Ford would need supply from the 
equivalent of a whole smelting plant to churn out its new F-150 
trucks, providing a big new source of demand. 
    He added that some Japanese aluminium product makers such as 
top manufacturer UACJ Corp  5741.T  were aiming to win a bigger 
slice of the growing U.S. market by adding production facilities 
there. 
    But Ishiyama, also the president of Nippon Light Metal 
Holdings Co Ltd  5703.T , said Japanese automakers had been 
trying to improve car efficiency through technological advances 
rather than shifting to aluminium vehicles.  
    "However, we have a long-term goal to aim to boost aluminium 
demand in Japan to 6.5 million tonnes a year by 2035 from 4 
million tonnes now by widening the metal uses to new areas 
including automobiles," Ishiyama said. 
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    GRAPHIC on Japan aluminium premiums, LME prices 
                               http://link.reuters.com/cer32w 
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    RECORD PREMIUMS 
    Ishiyama said that the premiums buyers must pay over LME 
cash prices to secure physical metal are far too high, as actual 
freight, insurance and other costs to get metal delivered would 
be around 10 percent of current premiums. 
    Aluminium buyers in Japan have mostly agreed to pay record 
premiums of $400-$408 per tonne over LME prices for 
July-September shipments, up 8-12 percent from the previous 
quarter.  ID:nL4N0PC2TN  
    The country is Asia's biggest importer of the metal, and the 
fee sets the benchmark for the region. 
    The premiums, which have nearly doubled from two years ago 
and risen five-fold from five years ago, come as smelter 
shutdowns and logjams in releasing metal from LME storage have 
squeezed global supply. 
    He said that while association members could pass on gradual 
rises in LME prices to their customers, it was more difficult to 
do the same with soaring premiums. 
    "In some deals, we can pass on the cost of the metal and 
premiums, but we have more cases which we can't do that." 
 
 (Reporting by Yuka Obayashi; Editing by Joseph Radford) 
 ((Yuka.Obayashi@thomsonreuters.com)(+813-6441-1798)(Reuters 
Messaging: yuka.obayashi.thomsonreuters.com@reuters.net)) 
 
Keywords: JAPAN ALUMINIUM