Investigation into certification of car models is likely to dampen aluminum demand in Japan

Demand for aluminum in Japan’s auto industry may decline after leading automaker Toyota suspended production, sales and deliveries of three models pending certification review by Japan’s Ministry of Landscape, Transport and Tourism, sources said.

Mazda has also reportedly stopped deliveries of two models currently in production.

The suspensions, which came into force on June 3 to allow authorities to conduct on-site inspections, were due to end at the end of June but have now been extended until the end of July, sources told Fastmarkets.

The automotive sector is Japan’s largest consumer of aluminum, accounting for 1,653,800 tons, or 43.8%, of the country’s total demand for the light metal, which will reach 3,771,300 tons in 2023, according to the Japan Aluminum Association.

Toyota’s latest earnings release shows that the company produced 999,088 units in the country from January to April 2024, a decrease of 83,773 vehicles or 7.7% from 1,082,861 units in the same period of 2023.

Different opinions on what impact this will have on the aluminium market

“Although there is no real impact of the investigations in the automotive sector at the moment, there is expected to be an impact in the future,” said a trade source. “We have heard that some manufacturers will be cutting production next month.”

However, a second trade source said the likely impact of the investigations was still unclear.

“We have not received any inquiries about delivery delays so far,” said the second dealer.

Most market participants stated that they do not expect any significant impact on aluminum prices.

“We expect a decline in demand in the automotive sector, but it will not be a major decline,” a third trade source told Fastmarkets.

Despite a possible slowdown in demand for aluminium, supply in the region remains tight. Prices are supported by premiums offered for the third quarter, which are above the latest agreements in the quarterly negotiations.

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

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