The October Aluminum Monthly Metals Index (MMI) fell two points for an October MMI subindex value of 91 (its lowest since August 2017).
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LME aluminum prices fell slightly in September. However, the mid-term trend has moved mostly sideways, trading between the $1,970-$2,170/mt level. Movements outside this band could indicate bullish or bearish signals for aluminum.
Buying organizations may want to remember that the $1,970/mt level has served as a strong support level (or floor) since August 2017. Aluminum prices fell toward that support level two times during 2017 and 2018, but then rebounded from it.
Aluminum prices decreased in December and April. Therefore, buying organizations may want to closely follow how aluminum prices react to that level.
Alumina Supply Concerns
LME aluminum prices showed an anomaly with the sideways trend driven by supply concerns.
Last Wednesday, Oct. 3, LME aluminum prices rose sharply to over $2,222/mt, on the back of Norsk Hydro’s announcement saying it would cease alumina production at its Alunorte alumina refinery in Brazil due to an environmental dispute.
Aluminum availability remains particularly tight in North America. Therefore, LME aluminum prices responded swiftly to supply concerns and tight supply.
However, LME aluminum prices retraced as Brazil granted Hydro the permits it had wanted for new investments at the Alunorte plant in Brazil. Hydro will use new technology to extend the disposal area necessary to continue and expand alumina operations. The refinery will operate at 50% of capacity to start. The decision came late on Friday following difficult negotiations and after the company said it would halt production. The Alunorte alumina refinery has operated at half capacity since March.
The mere news of the alumina shutdown signifies how tight the aluminum market remains. Any indication of a production slowdown, even for raw materials, could send aluminum prices higher.
Chinese SHFE aluminum prices fell slightly in September and then increased in October.
SHFE aluminum prices followed a similar trend to LME prices; both have moved in a sideways trend.
U.S. Domestic Aluminum
As a result of the ongoing uncertainty in the aluminum market, U.S. aluminum Midwest premiums have skyrocketed this year.
However, the current premium has traded sideways for the third consecutive month. The current premium stands at $0.19/lb.
What This Means for Industrial Buyers
Despite the recent change to a sideways trend, the LME aluminum price trend suggests a continuation of the bull market that started last year. Tariffs, sanctions and supply concerns will act as a support to aluminum prices, both for LME aluminum and the U.S. Midwest Premium.
Adapting the right buying strategy is crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.
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Actual Aluminum Prices and Trends
LME aluminum prices fell this month, with a closing price in September of $2,054/mt.
Meanwhile, Korean commercial grade 1050 sheet fell by 0.3%, following last month’s downtrend. Chinese aluminum primary cash prices decreased by 1.41%, while China aluminum bar fell sharply by 6.19%. Chinese aluminum billet prices also decreased 6.68% this month, to $2,158/mt. The Indian primary cash price fell by 2.42% to $2.01/kilogram.