Alcoa, Rusal Shares Drop On LME Warehouse Rules

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Shares of major aluminum producers, including Alcoa and United Co. Rusal dropped on Thursday, “as investors anticipated that new London Metal Exchange warehouse rules could depress aluminum prices,” reported The Wall Street Journal.

“The LME, the world’s largest metals exchange, on Thursday announced final rules designed to speed the delivery of metal out of its global warehousing network. Metal users like Coca-Cola Co. KO -0.07% and MillerCoors LLC have complained that bottlenecks to retrieve aluminum from warehouses overseen by the LME were inflating their costs.”

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“The LME’s rule would essentially force warehouses that are home to long waits for metal to deliver out more metal than they take in. That, analysts say, could speed the flow of aluminum out of warehouses and pressure prices lower.”

The week’s biggest mover on the weekly Aluminum MMI® was the cash price of primary aluminum, which saw a 3.2 percent decline on the LME to $1,784 per metric ton. This comes on the heels of a 1.2 percent increase the week before. Following a 1.2 percent increase in the week prior, the 3-month price of aluminum fell 3.2 percent on the LME last week to $1,830 per metric ton. The cash price of primary Indian aluminum fell 1.3 percent after rising 4.7 percent the week before.

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Chinese aluminum prices were mixed for the week. Since last week, the price of the cash price of Chinese aluminum fell after moving 0.4 percent. Chinese aluminum billet prices were off slightly, down from a week ago. Chinese aluminum bar remained unchanged for the week.

The price of Korean 3003 coil premium over 1050 sheet did not change since the previous week. Korean 5052 coil premium over 1050 sheet remained essentially flat from the previous week. The week finished with no movement for European 5083 plate. Following a steady week, prices for European 1050 aluminum closed flat.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends. 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.