Japan's aluminium demand falls amid automotive sector challenges, recovery expected in H2CY'24

According to the Japan Aluminium Association, Japan's aluminium demand (domestic and export) fell by 4.7% in the first quarter of 2024, totalling 882,500 tonnes (t). Domestic demand decreased by 4.1% to 849,000 t. Meanwhile, exports dropped significantly by 17.8% to 34,000 t.

The transportation sector, which is the largest consumer of aluminium in Japan, representing 45% of the total demand, saw a 1.2% decline in demand to 382,000 t. This decline was attributed to certification fraud issues affecting auto manufacturers. The construction industry also experienced a 2.5% decrease in demand, dropping to 124,000 t, due to a slowdown in new housing starts and reduced use of aluminium in construction.

Japan's primary aluminium imports decreased by 2.8% to 244,000 t in Q1, while imports of aluminium and aluminium alloy scrap fell by 20.7% to 22,000 t.

Market participants expect the automotive sector's demand for aluminium to pick up in the latter half of 2024. Earlier in the year, demand was subdued due to certification issues and recalls. However, production for three Toyota models, which had been suspended since 3 June, is set to resume in early September, following the Ministry of Land, Infrastructure, Transport, and Tourism's confirmation of compliance with standards.

It is anticipated that the stability of aluminium demand from the automotive industry will gradually recover. Toyota, Japan's leading car manufacturer in 2023, reported a decrease in production to 1,508,416 units in H1CY'24, down 8.2% from the same period in 2023 due to certification issues and production suspensions. June's domestic production dropped to 254,010 units, marking an 18.8% y-o-y decline.

Despite these challenges, the automotive sector remains the primary driver of aluminium demand in Japan. The sector used 642,300 t of aluminium, up 0.2% from 640,700 t in the same period in 2023.

In addition, Japanese automobiles are facing increasing competition from Chinese manufacturers, particularly with the rise of new energy vehicles and intensified price competition. Japanese automakers have reported declines in global sales, including in China.

Exports of Japanese motor vehicles from January to June 2024 totalled 2,017,660 units, a slight decrease of 0.3% compared to 2,023,425 units in the same period of 2023.

Outlook

Looking ahead, demand is expected to improve in the latter half of 2024 as Toyota resumes production and certification issues stabilise. However, challenges from rising competition and declining global sales persist.