FOCUS: Brexit deadlock casts doubt on secondary aluminium sector amid UK auto plant closures

The temporary closure of Japanese carmaker Honda’s Swindon plant last week sparked concerns through the local downstream aluminium sector that a no-deal Brexit would prompt a chain reaction of automotive closures and sound the death knell for UK car production.

Compounding this, a global pandemic, bloated freight costs, overpriced containers and the proliferation of scrap shortages have driven aluminium ingot prices higher globally in recent weeks.
But with the United Kingdom’s trade trajectory now hanging in the balance, some market participants are anticipating a sharp decline in domestic ingot and scrap prices in the first quarter of next year, while others have already indicated that margins would not be able to sustain impeding duties on UK exports.
Honda paused production at its South Marsdon factory in Swindon last week, citing a lack of parts due to transport-related delays as the key reason. In a statement issued on Wednesday December 9, the carmaker said it plans to monitor the situation with a view to restart production as soon as possible.

According to its purchasing policy, Honda operates its goods procurement on what is known as a “just-in-time” supply chain, whereby...

Published

Hassan Butt

December 18, 2020

13:47 GMT

London