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Aluminum Price

Aluminum Price

Aluminum

First Published: 14 November, 2022
Last Updated: 23 November, 2022
Fact-checked by Adrian Müller

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Aluminum price refers to the cost of aluminum, a flexible, lightweight, corrosion-resistant, and recyclable steel used in many industries, such as construction and aerospace. After oxygen and silicon, it is the most abundant element in the earth’s crust at 0.33. As one of the world’s largest aluminum producers, the construction and transportation industries make up 50% of its aluminum customers, according to Russia-based conglomerate UC Rusal. The advent of electric vehicles will further increase the demand for steel used in the structural frame of the car body and battery packs to keep the car soft and improve battery efficiency.

Table of Content

Current Aluminium Price Chart

Aluminum Historical Price

Russia-Ukraine Conflict

Aluminum prices rose in tandem with other metals in the first quarter after the escalating disaster in Ukraine, and upcoming sanctions against Russia’s supply were encouraged. Russia is not the world’s largest aluminum producer but it accounts for 4.2% of the world’s supply. No direct sanctions have been added to the metal. Still, Russia’s shipping and bank transfer issues have complicated the export process.

In mid-March, the LME market faced temporary nickel pressure, prompting traders to close positions across base metal institutions, citing trade uncertainty. After the event, however, aluminum costs regained most of the previous month’s gains, with the region finishing slightly higher at $3,550/tonne compared to its peak of $3,849/tonne. After steel surged in LME trading, aluminum was the best-performing metal, recording liquidity growth through the discounted bid/ask spreads. Steel’s desirability as the safest base steel across institutions was confirmed. The volume was simply below the historical average. In the second quarter, global macro conditions deteriorated again, with Chinese-speaking financial systems suffering from COVID-19. The situation paints a lackluster picture of both supply and demand for steel. Therefore, the price remains dependent on the variety.

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The Olympics

After the Olympics ended in March and the Blue Sky Initiative’s energy distribution ended, there was an intense backlash from the supply side. China’s total alumina output was 6.55 million tons, of which 6.34 million were metallurgical grade alumina. Production soared month-on-month, with Shanxi and Henan up 19% and 78%, respectively. Aluminum production in March was slightly flat at 3.32Mt, with 12Myoy at 0.92%. Although, this increased by 12% mom as the industry rebounded from a slowdown in January and February. Imports continued to perform well throughout March, with customs clearance pointing to bauxite imports around 11 am, 7M MT, up 13.58% m/m, up 15.79% y/y. Imports from Australia totaled 2.95 million tonnes, up 15.62% month-on-month. Imports from Guinea amounted to 6.18 million tons. China’s bauxite imports were stable year-on-year and in terms of parameters after February rations but may decline in April. The wait time for a ship to China has tripled to 12.1 days in recent weeks.

China’s Aluminum Market

Chinese supply and demand fell in April, but LME and SHFE inventories declined, indicating continued domestic and international use of the metal. Premium claims in Shanghai have been flat over the past few months as they began to decline in October 2021. In China, aluminum inventories declined as finished goods manufacturers increased inventories. Still, finished goods inventories are expanding due to a lack of demand from suppliers. Indeed, customers have mined aluminum inventories to fill material shortage gaps due to the loss of adequate logistics. China is producing on demand, which will pick up the most between easing lockdowns and stimulus measures; both are expected to lag in Q2 or Q3. China aluminum prices will rebound strongly in 2021 as the economy reopens after Covid-19 lockdowns.

Aluminum users worldwide rebounded in June, driven primarily by the Asian region. All other sectors continued to say no, with the US and Europe heading into contraction territory, their lowest ranges in years. The index rose from 49.2 to 53.4, showing a solid performance. Indeed, production from Asia rose for the first time in nine months and at the fastest pace since the 2010 shutdown when the lockdown situation in China resumed. Moreover, Europe is experiencing a steeper decline than America. However, the rate of decline in demand remains to be determined, and the market is already pricing in a recession in Europe by the end of 2022. Still, the outlook for the US remains uncertain. Demand for aluminum won’t go away completely, especially as the sun continues to grow. However, the contraction in the construction sector will undoubtedly ease this year. Chinese officials have allowed the local government to sell $220 billion of its bonds to support infrastructure in the second half of 2022. As a result, credit hit a record high in June, penetrating the majority but unlikely to bounce back from the economic boom. Asset markets continue to struggle, with acquis and income each hitting 31 for five consecutive months. China’s economic system should improve slightly in H2, but not enough to offset the softening financial outlook in the rest of the world, keeping metals gains tempered.

Regulation could help slow fees, but they are unlikely to rise as there are many tailwinds.

Trends in China, which accounted for half of the global aluminum production in 2020, drove commercial metallic fee movements throughout the year. By October 2021, greenhouse-gas-emitting smelters will be shut down due to China’s “target to exceed carbon emissions by 2030 and achieve carbon neutrality by 2060” aluminum soared to its 13-year high. China’s routine energy shortages similarly disrupted the supply chain for aluminum as coal-fired power plants shut down to meet China’s energy consumption targets. The decline was short-lived as prices surged in December, dwarfing the highs in October. The spot price of aluminum has risen above its $4,000 all-time high on concerns over post-war supplies in Russia and Ukraine, according to Capital.com records.

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Russia Sanctions

Goods spending surged as Western countries imposed sanctions on imports from Russia. Direct sanctions on aluminum have not been added to date. Still, numerous companies and countries have refused to do business with Russia, reducing supplies from the second-largest primary aluminum producer in the industry.

According to the Global Aluminum Institute, Russia will account for 6% of global aluminum production in 2021. Today, the focus has shifted from supply to demand. China’s zero Covid approaches have brought industrial hubs to a halt. In addition, aggressive rate hikes by the US Federal Reserve (Fed) pushed the US dollar index down after nearly two decades of overdemand for commodities due to rising exchange rates. As a result, aluminum fees fell more than 40% from their reported highs, and on 8 September 2022, spot market trading closed at $2,445/t, with a range rate of about $2,275/t. It broke below the $2,400/t support level in July and continues to say no to $2,353/t, a level not seen since April 2021. Also, lockdown restrictions were lifted in May, and domestic manufacturing and exports recovered. Global calls for China’s weakness and outlook have exacerbated recent declines and fueled fears of an international recession because the Fed plans to further tighten its economic cover in July. As the cost of the zone’s period fell, traders’ income margins shrunk significantly, causing some traders to scale back production. Especially in high-priced production areas such as Shanxi and Henan, they were forced into a drastic reduction in production. On the demand side, new orders for production extrusions and aluminum sheet/plate fell during the commission, driving house prices down. It found production indicators improved in June after lockdown restrictions were eased at the end of May. Alumina production was at 6.99 Mt, a minimum that had increased by 5%. In contrast, tonnage in the last three months increased by 12%, a series high. China’s aluminum production was 3.36 million tonnes, up 4.5% year-on-year. The first half of production was 19.5 million tons, up 0.47% year-on-year. The resumption of production and new capacity in Guangxi, Gansu, and Yunnan contributed to this significant increase. The summer is also at a downfall. We expect July production to decline month-over-month in line with ongoing market conditions that are likely to remain flat. At the same time, given the wait-and-see mood, new order volumes may be modest. While looser power control is said to favor production, the appeal of intrinsic photography remains dull. We have exported tons of raw aluminum and aluminum products. This is down 10% from the peak of 767,600 tonnes last month but still higher than the previous year’s figures. At the same time, domestic aluminum export profits declined. Aluminum export levels are, therefore, expected to stabilize in the coming months. The increase in overall exports in May was also primarily due to delays in domestic orders in April. Long-distance calls performed well as domestic and long-distance aluminum rates plummeted. The outlook for steel is expected to weaken as overall demand declines. However, we assume that the fabric will still be shipped to Europe. If the glut grows and China’s occasional interest rates succeed, then more will flow into Europe, where interest rates are currently high and inventories are low. As European tariffs are paid, the FTR has decreased but remains high. The level is $573/t, down from just over $600/t a few months ago. However, US Midwest tariffs continue to fall, reaching a low of $640/ton. This is not visible at the moment, as the US is more constrained by the market than the EU, which could also happen in 2020. A best-of-breed logistical issue may prevent spreads from easing further and allowing stashes to be preserved.

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European Imports and Coronavirus

Bauxite production in June was 97 million tonnes, up 31% from the previous year. Imports from Australia fell slightly month-on-month but remained at 3.09 million tonnes, up 32% year-on-year. Guinea’s output was 6.94 million tonnes, up 32% year-on-year. Imports from Indonesia decreased by 18.6% m/m and increased by 40% m/m to a total of 1.74 million tonnes, unchanged from the previous month. The mine has already exhausted its export quota. Secondary aluminum labor costs doubled by 4.3% to 43.0% in June. The automotive supply chain is showing signs of recovery as the impact of lockdown restrictions continues to ease. Similarly, auto sales continued to rise in June as government stimulus packages led the industry. Expectations for a manufacturing recovery, particularly in coronavirus-hit Shanghai, led to higher demand for secondary aluminum. Home and remote alumina prices have fallen in recent months and are expected to remain under pressure given abundant supply. The General Alumina Index is at 2,957 yuan, which means no for the first quarter of this year. Shandong (2,950-3,050 CNY/mt), Henan (2,970-3,070 CNY/mt), and Shanxi (2,870-2,920 CNY/mt) are all significantly lower. Similarly, Western Australia’s FOB fell 4% m/m to $345/mt but was still yuan 180/mt higher than domestic spending. Simultaneously with the decline in freight prices, neighboring prices’ competitiveness will prevail. As a result of lower costs and lower demand, some refiners have begun to cut production levels significantly as alumina costs have fallen below production fees. This should help aluminum find a bottom in the region. We’re seeing a similar story in the US, where some plants already feel the impact of high-strength costs.

Aluminum Current Price

Aluminum fees are down about 40% from last year’s highs. It has been hit by poor economic growth opportunities and a strong dollar price boom due to the return of tightening conditions in the arena. Demand for the metal in this business is undermined by the ongoing COVID-19 lockdown in China, the largest consumer of aluminum. It is used in various industries, such as construction, motors, packaging, and electronics. Spot market aluminum prices are now at $2,294.60 per tonne, hitting an all-time high of $4,000 per tonne in early March 2022, so after several months of monthly losses, a solid 17 months.

Aluminum Future Price

“We are pleased that the bill includes significant investments in public transit, electric vehicles, and charging infrastructure,” said Norsk Hydro Finance and VP of Methods Michael Stier in his interview with Aluminum Insider.

“All of these infrastructures will rely heavily on aluminum to reduce vehicle weight, improve performance and enable intelligent layout. In particular, we are excited about emerging trends in electric vehicle chassis layouts, battery construction, and segment substitution trends that have been needed to normalize North America’s charging era and infrastructure. In his 2030 aluminum fees forecast for Fitch, he traded in the metal at $3,300 a tonne.

Fitch Solutions’ forecast of $3,000/tonne this year and $2,800/tonne in 2023 includes expectations that supply disruptions will continue from next year into 2023. It is upside risks from tensions over Ukraine and Iran. In addition, Fitch Solutions believes alumina fees will continue to rise for longer due to ongoing supply issues and expectations of further demand for this input. The aluminum market remains particularly vulnerable to shocks due to historically low inventories. Russian and European smelters may react to fee hikes this year and next, bringing additional supplies to the market. Still, China’s production is critically inelastic. With nine-million tonnes a year of manufacturing in 2021, or 59% of the global output, Fitch’s answers highlight that China gives constrained scope for manufacturing growth below contemporary coverage. These supply constraints will anchor costs better even though manufacturing might be strongly incentivized elsewhere. The limits on Chinese language delivery will deliver a robust guide to charges in the short and long time.

Further, the firm expects an upward thrust in the call from China over the next 12 months as the government introduces some stimulus in reaction to weakening financial increase potentialities driven by using real property region weak points and strict Covid-19-associated lockdowns.

In the future, Fitch answers expect aluminum costs to remain elevated because aluminum may be supported by the accelerating shift to an inexperienced economy, especially through sustained demand from the automotive area. After all, the metal is utilized in place of different metals to deliver electric automobiles.

In this regard, the firm expects to look at the improved use of steel in structural and frame additives of motors, including fenders and doors. In this connection, aluminum foam continues to produce creations and automobiles. Fitch Solutions expects China’s aluminum production to plateau after 2025, while banning upward moves will help reduce global aluminum surpluses. As such, China is expected to reach a peak smelting capacity of 45,000 tons in the next few years, with production capacity expected to reach 43,000 tons by the end of this year. Meanwhile, the company warns that growing demand for low-carbon aluminum poses a deadly threat to aluminum prices as sustainability remains a priority over the next 12 months. There may not always be enough demand to deliver a large or credible “green bounty,” but as the carbon-neutral target date approaches, the market is looking to make more sustainable payments – something that should give you a headache, Steel, Review Fitch answers. Global financial institutions forecast aluminum costs to reach $2,400 per ton.

The World Economic Fund (IMF) predicts that aluminum prices will rise to $2,083/tonne in 2021, up 22% year-on-year, the most significant projected growth in a series of three forecasts, and 2022 is forecast to rise to $2,126/ton. The IMF’s long-term forecast says that in 2026, the price of aluminum will reach $2,276/tonne. Innovation and Science Australia (ISA) forecasts that aluminum prices will rise to $2,134/tonne in 2021 and $2,160/tonne in 2022. This is the highest growth forecast using any of the three companies.

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Conclusion

According to the Westpac Market Outlook in its August 2022 report, aluminum is expected to trade at around $2,500 per tonne by the end of the year, about $250 higher than it is today. By September 2024, however, Westpac expects metals to fall to about $1,993 per tonne. Interest rate hikes by the US Federal Reserve and the Bank of England have also plagued aluminum producers quite a bit lately as borrowing costs have risen along with energy costs. Aluminum is a very energy-intensive metal to produce. It can become a loss-making metal in the short term, causing producers to turn to other metals. As such, it is possible to run out of aluminum in the market, especially after Australia banned the supply of aluminum oxide to Russia in recent months. Therefore, this could lead to higher aluminum prices in the short term, as predicted by the Westpac Market Outlook. Aluminum prices fell last month as supply concerns eased and demand softened. May prices averaged $2,840 per tonne, down 12.6% from April prices. However, the average aluminum price rose 16.7% year-on-year. Aluminum, meanwhile, traded at $2,758 per tonne on 31 May, down 9.1% from the same day last month. Weak demand appears to have contributed to the fall in aluminum prices in May. Worsening global economic growth prospects due to the impact of high inflation and the civil war in Ukraine, as well as restrictions on activity in China amid Covid-19 restrictions, are hurting aluminum consumption and driving down prices. Notably, aluminum demand in China, a major consumer, reportedly fell by more than 5% in April, marking the steepest decline since the pandemic began in March 2020. On the supply side, production concerns have eased further in recent weeks. In April, production in China accelerated to record highs as the first shocks of the war subsided.

Increasing use of aluminum in various end-use industries such as construction, packaging, and automotive across the globe primarily drives the aluminum market. Additionally, increasing demand for ready-to-eat (RTE) food and beverages is further fueling the market growth as aluminum is widely used to manufacture single-use cans. Additionally, aluminum is commonly used in pharmaceutical packaging as it provides a barrier against contamination from moisture, light, air, etc., ensuring a long product shelf life.

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About the author – D. Schmidt

I’m a German stock trader who has lived around the world. I travel extensively and believe that my experiences give me a unique perspective on global markets. I love trading! It’s always exciting to see what happens next. My goal is to help people understand the game so they too can enjoy it to the fullest. In this blog, I will share some tips and tricks that helped me along the way.

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