Japan Aluminum Stockpiles Jump to Highest in Decade

By Jae Hur

Feb. 16 (Bloomberg) -- Aluminum stockpiles in Japan, Asia’s largest importer, climbed to the highest in more than a decade in January as a deepening recession slashed demand for the metal used in homes and cars.

Inventories in Yokohama, Nagoya and Osaka ports jumped 64 percent from a year earlier to 363,200 metric tons as of Jan. 31, Tokyo-based Marubeni Corp. said today. Stockpiles rose 15 percent from Dec. 31, reaching the highest since September 1998, when they totaled 401,000 tons, Japan’s largest importer of the light metal said.

Stockpiles increased after Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, amid an unprecedented collapse in exports and production. Toyota Motor Corp., the world’s biggest carmaker, will slash domestic production 54 percent in the current quarter as demand plunges in the U.S. and Japan.

“We may see a steeper decline in aluminum shipments for January than we saw in December,” said Koji Iida, a spokesman for the Japan Aluminium Association. “It’s worse not only for domestic demand but for exports because of the surging yen.”

Japan’s shipments of rolled aluminum products tumbled 22 percent in December, the biggest drop since April 1981, as demand slumped because of accelerated production cuts by carmakers and machinery companies. Shipments fell to 142,976 tons from 182,566 tons a year earlier, the Japan Aluminium Association said Jan. 28. It was the third straight monthly decline.

Economy Shrinks

The yen advanced 18 percent against the U.S. currency in the past year and traded at 91.59 to the dollar at 1:17 p.m. in Tokyo. Japan has been in a recession since November 2007, according to a government panel that dates the economic cycle.

The country’s gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

Exports plunged a record 13.9 percent from the third quarter as global demand for Corolla cars and Bravia televisions slumped. Toyota, Sony Corp. and Hitachi Ltd. -- all of which are forecasting losses -- are firing thousands of workers, heightening the risk a slump in household spending will prolong the recession.

“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “All we can do is wait for overseas demand to pick up.”

Toyota Cuts

Toyota’s output, excluding its Daihatsu Motor Co. and Hino Motors Ltd. units, will drop to about 519,000 vehicles in the three months ending in March, compared with 1.13 million units a year ago, according to figures derived from Toyota’s latest full- year forecast. Toyota spokesman Paul Nolasco declined to confirm the figures.

Industrywide vehicle sales in Japan fell the most in 35 years last month. The country is headed for its worst postwar recession as factory output slumped an unprecedented 9.6 percent in December and unemployment surged.

Aluminum for delivery in three months on the London Metal Exchange fell 0.2 percent to $1,375 a ton at 12:33 p.m. in Tokyo. The metal has plunged by more than a half in the past year as the global recession cut demand and inventories more than tripled to a record. Aluminum stockpiles in warehouses approved by the LME reached 2.93 million tons on Feb. 13.

A breakdown of the Japanese stockpiles data follows:

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Yokohama Nagoya Osaka Total =============================================================== Jan. 31, 2009 171,500 177,700 14,000 363,200 Dec. 31, 2008 145,800 157,500 13,000 316,300 Jan. 31, 2008 118,300 91,200 12,000 221,500 (Figures are in metric tons.) ===============================================================

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net