Investigation into automotive model certification expected to dampen aluminium demand in Japan

Market sentiment remain mixed on whether the investigation will impact aluminium prices and production

Demand for aluminium in Japan’s automotive sector may drop after leading car manufacturer Toyota suspended the production, sale and shipment of three models pending an investigation into certification from the country’s Ministry of Land, Transport & Tourism, sources said.

Mazda has reportedly also halted the shipment of two models currently in production.

The suspensions, which were implemented on June 3 so authorities could conduct on-site audits, were expected to end at the end of June, but have now been extended until the end of July, sources told Fastmarkets.

The automotive sector is the biggest user of aluminium in Japan, accounting for 1,653,800 tonnes, or 43.8%, of the country’s total demand for the light metal, which was 3,771,300 tonnes in 2023, according to the Japan Aluminium Association.

The latest results statement from Toyota shows that the company produced 999,088 units in the country from January to April 2024, down by 83,773 vehicles, or 7.7% from 1,082,861 units in the same period of 2023.

Mixed views on how this will impact the aluminium market

“While there’s no real impact at the moment from the automotive investigation issue, there’s an expectation [there will be] an impact in the future,” a trader source said. “We heard that some manufacturers will cut some production next month.”

But a second trader source said the likely impact of the investigations was still unclear.

“We have yet to hear of any requests for deliveries to be delayed,” the second trader said.

Most market participants said they did not expect any impact to be significant for aluminium prices.

“We expect a slowdown in demand from the auto sector, but [there] will not be a huge decrease in demand,” a third trader source told Fastmarkets.

Despite the potential for a slowdown in demand for aluminium, supply tightness remains in the region, with prices being supported by premiums offered for the third quarter being above the previous settlement in quarterly negotiations.

Fastmarkets’ twice-weekly assessment of the aluminium P1020A (MJP) spot premium, cif Japan was $145-160 per tonne on Tuesday June 18, up from $140-155 per tonne on June 11.

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