Japan's scrap aluminum prices have risen by 5-8% from a month ago due to tightening supply, local trade sources said Tuesday.
Prices for telik, used by secondary aluminum alloy smelters, were heard in the range of Yen 135-140/kg ($1,380-1,430/mt) ex-yard this week, up Yen 5-8/kg from a month ago, dealer and consumer sources said.
One west Japan scrap dealer said telik traded at Yen 140/kg ex-yard for over 1,000 mt volumes. "There are two large secondary aluminum smelters in the Osaka area and they compete to secure telik," the dealer said.
Meanwhile, a secondary aluminum smelter in central Japan said he was able to buy at prices slightly lower. Both sources, however, agreed that prices for all scrap types were up by 5% or more from a month ago.
The scrap dealer said auto engine shred prices were up by Yen 10/kg month-on-month.
Volume of scrap generated at appliance manufacturing plants remained low due to lower-than-expected run rates. Some scrap dealers may also be holding back in expectation of higher prices in the near term, traders said.
Scrap prices typically rise in the fourth to the first quarter as scrap yards in north Japan close due to heavy snow fall.
Market participants, however, expressed mixed views on the near-term scrap supply outlook.
One source said Toyota Motor planned to increase January output to 14,000 vehicles/day from 13,000 vehicles/day for November-December.
Japanese car sales typically increase in the first quarter of the year before the fiscal year ending in March. Japan's consumption tax will rise to 8% in April from the current 5%, which will likely fuel the pre-tax hike car sales, sources said.
"Stronger demand will tighten scrap supply further," the source said.
Meanwhile, the central Japan consumer said there may be more buildings dismantled as more individuals seek to rebuild their homes before the consumption tax hike. The move will generate more scrap.
