Monthly Aluminum MMI®: With Alcoa Earnings Coming, Prices to Stay Low

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While Alcoa is slated to announce Q4 earnings later this week, MetalMiner’s results of the monthly Aluminum MMI® for January are already in. Our aluminum price index registered a value of 92 in January, an increase of 1.1 percent from 91 in December.

LME prices remain low, however, averaging $1,784 per ton in the month of December versus $1,794 per ton in November.

On the other hand, prices have gained some buying pressure after meeting a support level at the beginning of the month. As we stated in our last Aluminum MMI®, prices are under a long-term downtrend with prices falling and new peaks always remaining lower than previous ones.

As For Premiums… 

As my colleague Stuart Burns wrote recently, “in an effort to reduce the physical premiums being charged in the market and reduce the excessive load-out queues, the LME is introducing increased load-out rates and other restrictions to LME warehouses that have queues of more than 50 days, but so far, physical premiums have risen rather than fallen in anticipation of the change.

“We could have unexpected and unpredictable price movements as a result of unseen stock movements into and out of the aluminum market. Make no mistake: shadow warehouse stocks present a risk to the market, and there’s probably not much any of us can do about it.”

With all that said, we expect prices to keep gaining support during this month, but most likely trading below $1,900 per metric ton as they face resistance at that level. In the near term, we still see aluminum prices struggling and for that reason, placing any forward buys may be risky until we see signals pointing to a trend reversal.

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Key Price Drivers

After dropping the previous month, the cash price of primary aluminum prices rose 3.5 percent on the LME to $1,771 per metric ton. The aluminum 3-month price rose 3.3 percent on the LME to $1,811 per metric ton after falling the previous month. The cash price of primary Indian aluminum rose 2.2 percent to settle at $1.81 per kilogram. After dropping the previous month, the price of European 1050 aluminum prices rose 1.3 percent to $2,842 per metric ton.

At $3,324 per metric ton, European 5083 plate was down 4.2 percent for the month. Chinese aluminum scrap closed the month at $2,063 per metric ton after dropping 2.0 percent. With a 1.3 percent decline, the Chinese aluminum cash price closed the month at $2,330 per metric ton. Last month, Chinese aluminum billet prices dropped by 0.4 percent to $2,347 per metric ton.

Hovering around $4.00 per kilogram for the month, Korean 3003 coil premium over 1050 sheet remained unchanged. Prices for Korean 5052 coil premium over 1050 sheet remained constant this past month, holding at around $4.14 per kilogram. Last month was consistent for Chinese aluminum bar, which did not move from $2,347 per metric ton. At a price of $3.95 per kilogram, Korean 1050 aluminum sheet did not budge the entire month.

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.

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