CHINA ALUMINUM: Domestic ADC12 prices slip on weak demand

Offer prices for aluminum alloy ADC12 in China's domestic market inched down this week as a prolonged period of weak demand continued, local industry sources said Tuesday.

Leading producer Sigma Metals kept its offers at Yuan 17,100/mt ($2,719/mt) ex-works Tuesday, unchanged from last Tuesday. Most non-Sigma offers were heard around Yuan 16,100-16,300/mt, slightly lower than Yuan 16,200-16,400/mt the previous week.

Platts lowered its weekly China domestic ADC12 assessment to Yuan 16,100-16,300/mt ex-works Tuesday, from Yuan 16,200-16,400/mt last week.

A Jiangsu-based producer said his company recently sold some material in the domestic market in the range of Yuan 16,100-16,300/mt ex-works.

"Buying interest for ADC12 has failed to pick up in China and prices are down because of prolonged poor market conditions," the producer said.

"Scrap supply in China and overseas remains tight, affected by reduced recycling activity in a weak global economy ... It's getting more difficult for Chinese ADC12 producers to do business nowadays as the production cost is high, affected by tighter scrap supply while prices stay weak, depressed by weak global demand," he added.

Another producer said the amount of ADC12 used in the production of household appliances and automobiles had been declining as global demand for the products remained lackluster. "I don't think domestic ADC12 prices in China will rebound any time soon as the market continues to be pressured by more supply than demand," he said.

A third producer expected prices to remain weak for the rest of the year. "Domestic demand traditionally picks up in the fourth quarter, but this year is the exception," she said.

A Chinese diecaster reported buying ADC12 at Yuan 16,100/mt recently. "Prices are down and the market is lacking new direction," she said.

The Chinese spot ingot price was heard around Yuan 15,070-15,110/mt Tuesday, down from Yuan 15,130/mt last Tuesday.

EXPORT PRICE DROPS AS COMPETITION INCREASES

The spot export price of Chinese ADC12 fell to $2,130-2,160/mt FOB China Tuesday from $2,140-2,170/mt last week due to increased competition in major export markets Thailand and Japan.

One Chinese producer reported sales of 100-200 mt lots into Thailand at $2,180/mt CFR Bangkok, which would include freight over FOB China prices.

"We want to make up for lost sales to Japan, where automakers are suffering from slow sales. Sales in Thailand, however, are so-so," a second Chinese producer source said.

Although Thai demand is strong, competition has increased among Chinese producers who are switching focus to Southeast Asia from Japan, sources said.

Automobile production in Thailand hit the record high of 292,604 vehicles in September, up from 174,212 vehicles a year ago, according to industry data.

In the Japanese market, Chinese producers continue to face competitive pressure from Russian and southern European producers. Chinese producers offered $2,140-2,150/mt CFR Japan for December-January shipments this week, while Russian and southern European producers offered at $2,090-2,100/mt CFR for December shipments, Japanese traders said.

Market participants cited the strong US dollar and prolonged slow demand in Japan for the lackluster trade.

The US dollar softened to Yen 79.50 this week from Yen 80-80.50 the previous week, but remained above Yen 77-78 levels seen in early October.

Japanese traders are also waiting for automakers to finalize production plans for December-February.

"There is talk of further output cuts in December... one automaker that had output of 12,000 vehicles/day in September has come down to 11,000-12,000 vehicles/day recently," one trader said.

One Tokyo trader said there was a 300-400 mt sale of Chinese material at around $2,140/mt CFR Japan for December-January shipments to an end-user who buys on a fixed monthly schedule.

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