With the exception of the Stainless Steel MMI® (to be published later this week), the Aluminum MMI® took the biggest hit, dropping four points to 94. This was a 4.1 percent fall month to month.
Prices fell across the board and across multiple geographies, including Europe, China and India. Falling LME prices weighed the complex down and only Korean semi-finished aluminum pricing provided any support.
MetalMiner’s Stuart Burns recently wrote an in-depth analysis of the aluminum market discussing the reasons behind longer-term weaker prices – essentially too much production and not enough demand. Yet the financing hijinks going on today still supports high Midwest premiums, which may give the impression of a well-supported aluminum market.
However, “the consistent year-on-year accumulation of surplus metal is a ticking time bomb for the aluminum market – that it will end in tears is as predictable as this year’s market surplus,” Stuart wrote in the article.
“As for aluminum market volatility, one may [falsely] assume that the slower demand and too much production would just lead to steady falling prices, but aluminum buyers may wish to remember that aluminum ranked as one of the top three volatile markets tracked as part of our MMI program in 2012,” said Lisa Reisman, managing editor of MetalMiner. “And we have already seen a five percent price drop since the beginning of the year.”
“Implementing commodity risk management strategies for this category of spend has a certain logic to it,” she continued.
Price Drivers of the Aluminum Index
After falling 5.1 percent, Chinese aluminum scrap finished the month at $1,929 per metric ton. Following a 4.8 percent decline, the Indian aluminum cash price reached $1.96 per kilogram. The price of Chinese aluminum billet fell 3.7 percent to $2,298 per metric ton. After falling 3.6 percent, the cash price of Chinese aluminum finished the month at $2,325 per metric ton.
The price of European 5083 plate dropped 5.1 percent to $3,427 per metric ton after staying flat the previous month. The price of European 1050 aluminum dropped 2.6 percent over the past month to $2,893 per metric ton after holding steady the previous month.
Prices for Korean 3003 coil premium over 1050 sheet saw a marginal gain, holding at around $3.88 per kilogram. At a price of $4.02 per kilogram, Korean 5052 coil premium over 1050 sheet hardly budged. Hovering around $3.84 per kilogram for the month, Korean 1050 aluminum sheet remained slightly up.
The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends over a 30-day period. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.