LME aluminum

MetalMiner's aluminum price index, the monthly Aluminum MMI®, registered a value of 90 in May, a significant increase of 2.3% from 88 in April.

Aluminum on the London Metal Exchange is back above $1,900 per metric ton, breaking short-term resistance to hit a four-month high.

China Ends Export Taxes

China erasing aluminum export taxes didn't seem to weigh down on prices; however, aluminum premiums took a beating when the news of China’s removal of export taxes came.

As my colleague Stuart Burns wrote in a recent article, the tax removal should reduce the domestic surplus of metal, supporting domestic prices and depressing prices in overseas markets. With current primary production counting for about 75% of total primary capacity, Chinese producers will have the ability to increase production without creating any shortages in China's domestic market.

Even outside China, production has been ramping up over the past six months. UC Rusal and Alcoa, Inc. have responded by closing older and less-efficient capacity, but even so, both they and other primary producers are investing in new capacity at the same time. Demand for aluminum remains robust, but the excess of supply is something that is clearly bugging aluminum producers.

Certainly, the supply outlook doesn't explain the recent price increase. However, the recent weakness in the dollar does. The dollar index is experiencing some turbulence for the first time in more than 9 months and that supported aluminum and most industrial metal prices in April.

Battery Research Continues

In other aluminum news this month we also had Stanford University  building an aluminum-ion battery prototype that offers various improvements over lithium-ion batteries. These aluminum-ion batteries will potentially make consumer electronics safer, charge faster and allow thinner or even flexible-form factors.

Get all of this month's exact prices in the full article.

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Aluminum has slowly and quietly regained some of the price strength it closed out 2014 with, but that might not be enough to pull the light metal out of this bear market.

The monthly Aluminum MMI® registered a value of 88 in April, an increase of 1.1% from 87 in March.

The Strongest of A Weak Metals Field

Aluminum prices remained rangebound in March. Compared to the rest of base metals, though, aluminum is holding its price very well. Indeed, aluminum and zinc are the only metals that haven't made multi-year lows yet in 2015. Demand growth in the automotive and aerospace sectors has helped the metal to hold onto its value.

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Aluminum lost most of its gains in the second half of 2014. In Q1 2015, prices remained rangebound as oil prices stabilized and the dollar caught a breath. What should we expect for the rest of the year?

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Alcoa Inc. said it would acquire Pittsburgh-based RTI International Metals Inc., one of the world’s biggest makers of fabricated titanium products for the aerospace and automotive industries, in a transaction with an enterprise value of $1.5 billion.

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For New York-based Alcoa, the world’s biggest aluminum producer by value, the stock-for-stock deal is part of its strategy to focus more on manufactured products for the aerospace and automotive industries.

Alcoa wants to become less reliant on its old-fashioned smelting business, which is suffering from weak prices for raw aluminum. Alcoa on Friday said it would look at closing up to 14% of raw smelting capacity. Since 2007, it has taken almost a third of its smelting capacity out of production.

RTI shareholders will receive 2.8315 Alcoa shares for each RTI share, representing a value of $41 per RTI share based on Alcoa’s closing price on Friday. RTI shares, which closed Friday at $27.28, jumped 28% to $35 in premarket trading Monday

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Alcoa Inc. on Friday said it is considering curtailing aluminum smelting and refining operations via closures and divestment as part of a continuing effort to improve its profitability.

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Over the next year, Alcoa said it would consider curtailing, shutting down or shedding up to 14% of its global smelting capacity and 16% of its refining capacity. The company said has already idled some of its operations.

The New York-based aluminum firm with major operations in Pittsburgh has been benefiting from past efforts to close unprofitable smelters in high-cost areas. The company said it has curtailed, closed or sold about 31% of its highest-cost global smelting capacity since 2007.

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This week the London Metal Exchange and several Wall Street banks saw an aluminum price lawsuit by purchasers thrown out by a Federal Judge in New York.

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US District Judge Katherine Forrest in Manhattan rejected claims brought by aluminum purchasers against several defendants including Goldman Sachs Group Inc., JPMorgan Chase & Co., Glencore Plc, and Hong Kong Exchanges and Clearing Ltd., which owns the London Metal Exchange.

Forrest said she will issue a decision later involving other defendants, including Detroit-based warehouse operator Metro International, which Goldman once owned.

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Aluminum giant Novelis and German supplier Henkel said today they have signed an agreement to develop advanced bonding technologies for aluminum-intensive vehicles.

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The first product, a pre-treatment that enhances the adhesion of glue and helps paint stick to aluminum, is already being vetted by automakers. Called Bonderite M-NT 8453, it would compete with and in some cases replace a similar product called Alcoa 951, which is the current industry standard coating for aluminum.

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MetalMiner's monthly aluminum price index, the Aluminum MMI®, fell to 87 in March, a decrease of 2.2% from 89 in February. Aluminum price drops nearly across the board – namely the LME aluminum 3-month price, which fell to its lowest since April 2014 – accounted for the latest hit:

However, even this aluminum fall is minimal compared to the losses of our other metals.

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The London Metal Exchange (LME) keeps moving forward with reform of its warehouse rules. As my colleague Stuart recently explained in a post, a definition on what load-out means has been accepted. Now metal cannot be merry-go-rounded within the same facility and by the same owner.

The long-awaited aluminum premium contract will be launched on October 26. We will have to wait to see how this impacts delivery premiums.

On the production side, non-Chinese aluminum production was unchanged in January, according to the latest figures from the International Aluminum Institute (IAI). Producers are still holding aluminum capacity line in terms of keeping smelters offline in the face of low prices and historical stock overhang.

The IAI was also in the news early last month because it stopped production of its monthly producer inventory figures, saying its own members are either not submitting the data at all or struggling to do so on a timely basis.

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A federal judge has dismissed antitrust litigation accusing a variety of Wall Street banks and commodity merchants of conspiring to drive up aluminum prices by reducing supply.

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In decisions on Tuesday night and Wednesday, US District Judge Katherine Forrest in Manhattan rejected claims brought by aluminum purchasers against several defendants including Goldman Sachs Group Inc., JPMorgan Chase & Co., Glencore Plc, and Hong Kong Exchanges and Clearing Ltd., which owns the London Metal Exchange.

Forrest said she will issue a decision later involving other defendants, including Detroit-based warehouse operator Metro International, which Goldman once owned.

The decisions are a setback for aluminum purchasers who raised price-fixing claims, in the highest-profile litigation affecting the base metals market in two decades.

These plaintiffs had accused Wall Street banks and commodity merchants of having colluded since May 2009 to hoard aluminum in warehouses. They said this led to higher storage costs, delays of up to 16 months to fill orders, and increases in prices of industrial products from soft drink cans to airplanes.

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Kobe Steel Ltd., a supplier of aluminum sheet to half of the Japan’s auto industry, is considering building a ¥100 billion plant in the US to expand sales to Japanese automakers operating in North America.

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The prize is an expected tenfold increase in demand for aluminum sheet here in the US, where stricter fuel economy standards have ignited a race among automakers to save weight and boost the efficiency of new models, driving up demand for the lightweight metal.

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The London Metal Exchange today said it is taking further steps to improve operations at its warehouses, as changes introduced on Feb. 1 have had little impact on aluminum warehouse bottlenecks for physical delivery.

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Large queues have built up at some of the warehouses dotted around the world that are operated under the LME’s rules. That has caused financial pain, but also operational inconvenience to companies that use aluminum.

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