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Japan

With an initial support rate of around 60%, new Prime Minister Fumio Kishida took office on October 4 and will guide Japan towards the virtuous cycle of growth and fair allocations. Meanwhile, new COVID cases have been falling sharply to around 100 per day; all restrictive measures in major cities have been eliminated and life is returning to normal. On the downside, new car sales in October fell around 30% year on year owing mainly to factory cutbacks caused by shortages of electronic parts. The post-COVID period will have its challenges.

Copper exports fell dramatically to 23,824 tonnes in July from a peak of 58,395 tonnes in March owing to import rules imposed in China and Malaysia as well as to tightening local supplies. Many local suppliers have reduced their commitments to rolling mills and are encountering difficulties in securing enough No.2 copper scrap at a time of strong mill demand.

The local market, in which two major smelters will undertake maintenance in November, has not really been affected by the shortages of No.2.

Strong aluminium demand from China has tightened the domestic market, with a wider range of aluminium scrap grades exported. A possible silicon shortfall resulting from the power shortage in China has already been pushing local ADC12 consumers towards negotiations for next year’s supplies. Meanwhile, a strike at Novelis Korea has forced the temporary closure of the factory, blocking imports from Japan’s UBC suppliers who normally provide 5000-8000 tonnes every month. This has had a big impact on the local market.

For stainless steel, strong demand from local mills as well as from exporters to Indonesia has tightened the local market despite a more bearish LME nickel. Scrap flows could change if export duties are imposed on nickel pig iron in Indonesia.