Japan’s UACJ to boost aluminum output as LNG tanker demand rises

By JAE HUR and ICHIRO SUZUKI
Bloomberg

UACJ Corp., the world’s third-biggest producer of rolled aluminum products, will expand its capacity for sheets used in liquefied natural gas (LNG) carriers by 50% next year to meet rising tanker demand.

The Tokyo-based company will increase annual output capacity for rolled aluminum used in the ships to 54,000 metric tons by the end of September 2015, from 36,000 tons now, Makoto Yakata, general manager at UACJ’s sales planning department, said in an interview.

UACJ is Japan’s top producer of rolled aluminum sheets for shipbuilders such as Mitsubishi Heavy Industries, IHI Corp., Kawasaki Heavy Industries and Hyundai Heavy Industries.

Japan, the largest buyer of LNG, is poised to increase it’s reliance on natural gas to make up for lost nuclear power generation after the 2011 Fukushima disaster.

Aluminum prices have risen almost 10% this year as major producers including United Co. Rusal and Alcoa cut output amid greater use of the metal by automakers.

“Demand from LNG carriers has increased after domestic nuclear power plants halted operations after the 2011 disaster,” Yakata said in an interview. A need for new ships is rising as Japan will start shale gas imports from the US in the coming years, he said.

UACJ has raised its forecast for demand from LNG carriers to 44,000 tons in the year starting April 2015, up from 21,000 this fiscal year and higher than its previous estimate of 24,000. It will increase to 56,000 tons in fiscal year 2016.

One LNG tanker uses about 4,000 tons of rolled aluminum sheets. The company will produce products for 30 LNG carriers through March 2017, he said.

Unprecedented Demand

Japan will need more than 20 new LNG carriers for its plans to import shale gas from the US, said Hiroshi Hashimoto, a senior analyst at the Institute of Energy Economics, Japan. The ships will either be new or chartered from existing fleets, he said.

“The increase in demand is unprecedented,” Hashimoto said.

UACJ said in May that its total rolled products sales will increase 3.8% to 996,000 tons in the year ending next March. Cans account for 66%, following car parts with 7% and rolled sheets at 5%.

The company will complete a new 180,000-tpy plant in Thailand by 2015, Yakata said. UACJ’s total annual capacity will rise to 1.3 million tons in 2016, from 1 million now, after the Thai plant reaches full capacity and output is expanded at its other facilities, he said.

UACJ, which was formed through a merger in October between Furukawa-Sky Aluminum Corp. and Sumitomo Light Metal Industries, is the biggest rolled aluminum producer after Alcoa and Novelis.

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