Aluminum MMI: LME Aluminum Drops, Midwest Premium at Four-Year High

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The July Aluminum Monthly Metals Index (MMI) fell six points, falling to April 2018 levels. The Aluminum MMI now stands at 95 points.

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LME aluminum prices fell in June and have continued to slide so far in July.

However, the rate of the declines has slowed.

Price changes do not appear sharp and selling trading volume remains weak. The price decrease looks like a retracement after the peak in April due to Russian sanctions.

Source: MetalMiner analysis of FastMarkets

LME aluminum prices have fallen toward December 2017 and April 2018 lows. These levels served  as a support to aluminum prices both times, and could cause aluminum prices to bounce back after reaching support.

Global Aluminum

At least for the short term, it appears as though trade policies will impact the global aluminum market.

After the U.S. tariffs on steel and aluminum in March, plus additional sanctions on Russia, aluminum now waits for its next cue.

Canada announced punitive measures on C$16.6 billion ($12.63 billion) worth of American goods in response to U.S. tariffs. The measures will stand until Washington changes the current aluminum and steel tariffs on Canada. Europe also responded to the U.S., approving provisional measures.

Russia became the seventh complainant to ask for a consultation with WTO members against the U.S. duties on steel and aluminum. China, India, the E.U., Canada, Mexico and Norway previously filed similar complaints.

SHFE Aluminum

Chinese SHFE aluminum prices decreased slightly in June, following the LME aluminum trend.

The slide appears less sharp than for LME aluminum prices, but still follows the main short-term downtrend.

Source: MetalMiner analysis of FastMarkets

U.S. Domestic Aluminum

As a result of ongoing uncertainty in the aluminum market, U.S. Midwest aluminum premiums have skyrocketed this year.

July’s premiums, however, have held flat since last month at $0.20/pound. Current levels remain  at more than four-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Despite the recent downtrend, the LME aluminum price trend suggests a continuation of the bull market that started last year.

Tariffs, sanctions and the latest tariff non-exemptions to Canada, Mexico and the E.U. may add support to rising prices, both for LME aluminum and the U.S. Midwest premium. Adapting the right buying strategy becomes crucial to reducing risks.

Buying organizations that want to start doing so now may want to take a free trial now to our Monthly Metal Buying Outlook.

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Actual Aluminum Prices and Trends

The Aluminum MMI basket generally fell this month. LME aluminum prices decreased this month by 5.51%, with a closing price in June of $2,160/mt.

Meanwhile, Korean Commercial 1050 sheet fell by 1.38%. Chinese aluminum primary cash prices decreased by 7.21%, while Chinese aluminum bar just fell 5.22%. Chinese aluminum billet prices also decreased 5.30% this month, down to $2,323/mt.

The Indian primary cash price fell by 7.36% to $2.14/kilogram.

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