Japanese trading houses were buying spot secondary aluminum alloy actively from China this week on the back of the US dollar having fallen to a six-week low of Yen 101-101.50, market sources said Tuesday.
"The US dollar touching Yen 100 is unlikely, I think the rate at around Yen 101.40 is the best level," said a Japanese trader, who has bought over 500 mt of ADC12 alloy ingot this week.
Another Japanese trader said he has bought around 1,000 mt of ADC12 from several Chinese producers this week, double his usual volume, driven by the strong yen.
Some Japanese diecasters were booking alloy for late October loading or December deliveries this week, two months in advance. Most Japanese diecasters were seeking October deliveries this week.
Active Japanese buyers said they were expecting Chinese ADC12 alloy prices to rise. "Offers were up $20-30/mt in the last few weeks," said a Japanese trader.
Chinese ADC12 offers were reported in the range of $2,100-2,200/mt CFR Japan this week, and deals closing at $2,100-2,120/mt CFR Japan. Three weeks ago, spot deals were below $2,100/mt CFR.
The Japanese buyers cited rises in London Metal Exchange high-grade aluminum prices and primary aluminum premiums as possible reasons behind the firmer Chinese ADC12 export prices.
"I don't think prices will hit $2,200/mt but Chinese producers are not likely to lower prices on the back of higher-than-expected silicon feedstock prices," said one Japanese trader.
Another Tokyo-based trader cited tightness in the global supply of scrap aluminum feedstock as supporting Chinese ADC12 prices. Chinese producers import scrap aluminum from the US.
Japanese traders were also eyeing the possibility of domestic ADC12 prices rising and selling Chinese imports to users of local alloys.
Meanwhile, two Japanese diecasters said they were not buying this week.
"The exchange rate has more impact than the changes in the dollar-based Chinese offers," said one diecaster source.
"There is yet a possibility of the US dollar hitting Yen 100-101. I will wait for that. Also, we don't have a definite demand outlook for October-December. July-September is doing better than the initial forecast, but we are not jumping into conclusions for October-December yet," he added.
"The recent rise in the Chinese prices may stabilize soon. I will wait," said a second diecaster.
