Last week, aluminum prices on the London Metal Exchange fell below $1,500 per metric ton for the first time in more than 6 years.
The Aluminum Association commented this month to the US-China joint presidential statement as good progress on environment but also said more needed to be done regarding China’s overproduction.
The new environmental law implementations promised by the presidential statement should provide incentives for carbon-intensive aluminum smelters in China to be weeded out.
It still looks like the market doesn’t have high expectations for aluminum. The oversupply in China continues to hit investor sentiment and analysts don’t expect China’s aluminum producers to close capacity anytime soon, despite the fact that many of them are underwater. China keeps adding production in its western provinces, where coal-based power is cheap.
Aluminum producers in the US are getting hurt the most, facing one of the darkness periods in aluminum history. The low price damage convinced Alcoa, Inc. split into 2 companies. The firm has found that its legacy smelting business, the company’s vertically integrated structure, is not the advantage it once was.
Aluminum hitting another price low just adds to the already bearish sentiment across metals markets. We can’t expect metal prices to turn around yet while we see this sort of weakness in individual metals like aluminum.