Aluminum stocks held at three major Japanese ports rose for a seventh straight month, hitting a 5-1/2-year high at the end of October as demand fell and the world’s third-largest economy unexpectedly slipped into recession.
The inventory increase also reflects slowing demand elsewhere in Asia as China steps up exports of cheaper aluminum products to neighbor countries, said a Tokyo-based trader who declined to be named, Reuters reported Tuesday.
Aluminum stocks held at the ports of Yokohama, Nagoya and Osaka rose 6 percent in October from a month earlier to 332,200 tons, the highest since March 2009, trading house Marubeni Corp said on Tuesday.
“Demand is usually slow after summer. But we also hear that domestic aluminum demand for construction has slowed due in part to a pullback after a sales tax hike,” the trader said.
Japan’s gross domestic product (GDP) shrank by an annualized 1.6 percent in the July-September quarter, after plunging 7.3 percent in the previous quarter following a rise in the national sales tax that clobbered consumer spending.
Japan’s economy had been forecast to rebound from the second-quarter plunge by 2.1 percent, but consumption and exports remained weak, saddling companies with huge inventories to work off.
“Another reason (for the rise in Japan’s aluminum stocks) could be expanded export of cheaper products from China to countries like Vietnam and Indonesia, which helps reduce demand for refined metal in the region,” the Tokyo-based trader said.
