Aluminum MMI: Aluminum prices continue to receive support

This month the Aluminum Monthly Metals Index (MMI) rose by 3.5%, as the aluminum price made gains in October.

Are you prepared for your annual aluminum contract negotiations? Be sure to check out our five best practices. 

Aluminum prices and demand increase

The LME aluminum price reached a 17-month high on Oct. 16 at $1,863.50/mt. The price has increased over 27% since its pandemic low of $1,459.50/mt. Prices dropped the last week of October but have since recovered sharply.
The aluminum price continues to rise along with demand.
According to the JP Morgan Global Manufacturing PMI, global manufacturing activity increased to 53.0 in October. The October reading marked the PMI’s best in 29 months. In the the North American market, the U.S. and Canada saw increases in new orders and production, along with Germany.
In Asia, manufacturing rose rapidly in China, India and South Korea.
The recent sharp increase in coronavirus cases — and consequent lockdowns — could be a risk to the improving manufacturing sector, particularly in Europe.
In the manufacturing sector, aluminum is used for construction, packaging and transport.

Strong demand in China

China continues to show signs of strong aluminum demand.
Unwrought aluminum and aluminum product imports remained high at 355,999 metric tons during September despite decreasing compared to 426,469 metric tons in August.

Effective Nov. 1, the Ministry of Ecology and Environment of China lifted import restrictions on high-grade aluminum scrap, no longer considering it solid waste.
The Aluminum Corporation of China (Chalco), reported that its alumina and refined alumina output increase by 5.0% and 4.3%, respectively. Meanwhile, its primary aluminum production in the first nine months of 2020 totaled 2.76 million metric tons, decreasing by 2.8% compared to the previous year.
Moreover, China added 375,000 metric tons of new annual capacity in September and restarted 160,000 metric tons of capacity.

U.S. imposes new tariffs

On Oct. 9, the U.S. Department of Commerce announced new tariffs on imports of common alloy aluminum sheet from 18 countries after determining they were dumped into the U.S.
The DOC calculated duty deposit rates for Germany of between 51.18-353.71%. For Brazil, the rates are 49.48-136.95%. Romania’s rates are 12.51-83.94%. Meanwhile, India’s rates are 5.44-79.43% and Indonesia’s is 31.12%.
Common alloy aluminum sheet is a flat-rolled aluminum product used in transportation, building and construction, infrastructure, electrical, and marine applications.
The new tariffs may have helped the MW aluminum premium increase slightly Oct. 12 to $0.13/lb.

Actual metals prices and trends

The Chinese aluminum scrap price increased 1.6% month over month to $1,987.24/mt as of Nov. 1. LME primary three-month aluminum rose 2.4% to $1,823.50/mt.
Korean commercial 1050 aluminum sheet rose 2.7% to $3.07/kg, while its European equivalent increased 3.5% to $2,583/mt.
Chinese aluminum billet and aluminum bar rose 3.3% and 3.2% to $2,297/mt and $2,397/mt, respectively.
Chinese primary cash aluminum rose 3.9% to $2,240/mt. Indian primary cash aluminum increased 4.1% to $2.04/kg.
Does your company have an aluminum buying strategy based on current aluminum price trends?