By Yuka Obayashi
TOKYO (Reuters) – Japan’s Sumitomo Chemical said on Thursday it will sell its 2.97% stake in Brazilian smelter Nippon Amazon Aluminium to YKK AP for an undisclosed sum and exit the business of reselling imported aluminium ingots.
The decision to leave the long-standing business was due to high volatility in profitability driven by international market conditions, the company said in a statement.
Production of high-purity aluminium and alumina at its Ehime Works in western Japan will continue, Sumitomo Chemical said, adding that it aims to expand the business, focusing on value-added sectors, such as semiconductors and life sciences.
Earlier this year, Sumitomo Chemical sold its 20.64% stake in New Zealand Aluminium Smelters and its 2.46% stake in Boyne Smelters in Australia to Rio Tinto.
Japanese trading house Mitsubishi Corp also sold its 11.65% stake in Boyne Smelters to Rio.
The exit of Japanese companies from the aluminium smelting sector has shifted the balance of power between global suppliers and Japanese buyers, a factor that Marubeni predicted this week would keep Japanese premiums elevated next year.
Japan is a major Asian importer of the light metal and the premiums for primary metal shipments it agrees to pay each quarter over the benchmark London Metal Exchange (LME) cash price set the yardstick for the region.
In negotiations for January-March shipments, some Japanese buyers have agreed to pay a global producer a premium of $228 per ton over the benchmark price, up 30% from this quarter and the highest since 2015.
Japanese companies have ensured stable procurement of the metal by investing in overseas smelting operations and securing ingots through their concessions, but overall imports have fallen recently to historically low levels amid falling local demand.
(Reporting by Yuka Obayashi; Editing by Subhranshu Sahu)
