The monthly Aluminum MMI® registered a value of 94 in December, a decrease of 1.1% from 95 in November.
*Note: Effective 12/1/14, MetalMiner updated some of the source data from China used to calculate this index. Therefore the December index reading appears a little more volatile when compared to the November reading. Any movements in the January reading will once again reflect only market price changes as opposed to market and source data prices changes.
Aluminum keeps fighting the general market as it tries to hold its gains for the year while commodities, overall, are falling sharply. In November, the entire commodity complex fell as crude oil slumped and the dollar continued to rise. Although crude is not the primary source of energy in producing aluminum, energy accounts for 30% of its total cost and lower oil prices can have a deflationary effect.
In spite of all these bearish developments, aluminum is doing okay, finishing the year with a 13% gain. The fundamentals for aluminum are stronger than other metals (such as copper) as aluminum keeps gaining market share from copper and galvanized steel.
Some might argue that aluminum prices ran ahead of fundamentals this year. However, this is nothing new in the market. Prices always move ahead of fundamentals since investors’ expectations are what makes prices move. In our view, aluminum won’t struggle to go higher because of bad industry fundamentals, but because the commodity market is weighing it down.
What This Means For Metal Buyers
Aluminum is one of the strongest metals of 2014. However, while commodities keep falling, it will be hard to see aluminum prices rising significantly.
A 4.8% drop over the past month left Chinese aluminum bar at $2,197 per metric ton. A 3.2% drop left the Chinese aluminum cash price at CNY 13,520 ($2,201) per metric ton. The cash price of primary Indian aluminum finished the month at $2.03 per kilogram after dropping 0.8%. Last month, the aluminum 3-month price dropped 0.5% on the LME to $2,025 per metric ton.
The price of European 1050 aluminum climbed 4.7% to $3,258 per metric ton. The price of Chinese aluminum scrap jumped 3.7% last month to $2,063 per metric ton. It was a strong month for European 5083 plate. The metal posted a 3.5% increase, finishing at $3,683 per metric ton. At $2,258, Chinese aluminum billet finished the month up 2.3% per metric ton. On the LME, the primary aluminum cash price grew 0.7% to finish at $2,071 per metric ton.
At a price of $3.37 per kilogram, Korean 3003 coil premium over 1050 sheet did not budge the entire month. Prices for Korean 5052 coil premium over 1050 sheet remained constant this past month, holding at around $3.51 per kilogram. Last month was consistent for Korean 1050 aluminum sheet, which did not move from $3.33 per kilogram.
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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.