This month the Aluminum Monthly Metals Index (MMI) rose by 7.9%.
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Aluminum prices continue uptrend
During November, LME aluminum prices increased by 10.9%, closing at $2,023/mt. This means that since its April low, the price recovered 38.5% and even reached a two-year high.
The price increase appears supported by a few factors:
- the Chinese market
- a general optimism after the announcement of viable coronavirus vaccines
- the U.S. election results appearing settled.
Markets expect China demand will continue to grow in the next few years, and along with the low interest rates, which are expected to stay for another year, consumers and traders have the ability to finance aluminum production. As in China, the U.S. has seen some recovery in property development and automobile demand, all of which require aluminum.
Fundamentally, however, the aluminum market remains in surplus by 1,603 kt, according to the World Bureau of Metal Statistics. This was further confirmed during LME Week, a month ago, where most research houses agreed the outlook for the aluminum market will remain in surplus despite high Chinese imports throughout 2020 and declining stocks at warehouses because oversupply sits in shadow or off-warrant stocks.
U.S. import investigations
The U.S. International Trade Commission (USITC) unanimously determined that unfairly-traded imports of certain aluminum foil from Armenia, Brazil, Oman, Russia and Turkey are causing injury to U.S. producers. As a result, the U.S. Department of Commerce will continue to conduct antidumping and countervailing duty investigations on imports of certain aluminum foil from the five countries. The Department of Commerce’s preliminary countervailing duty determinations concerning imports from Oman and Turkey are due on Dec. 23, and the rest are expected to be completed on March 8, 2021.
If the investigations conclude on tariffs, the MW aluminum premium should see a price increase, which would help U.S. aluminum producers.
Tight market for aluminum cans
The aluminum can market is really tight these days due to the lockdowns but also as consumers are progressively favoring more easily recycled aluminum cans over glass bottles and plastics.
This year, due to the pandemic, consumers switched their drink consumption trends, and the sales of canned beer and soda sales have held up well and are actually increasing for some. This had severe consequences on the aluminum cans supply chain.
“For the most part, the North American can industry is sold out for the next 24-36 months, and we don’t see the supply chain catching up to real demand until 2025-26,” Credit Suisse said in a recent report.
According to SPGlobal, U.S. producer shipments of aluminum can stock for the domestic market in the second quarter rose 5.5% year over year to 912.5 million pounds. Meanwhile, in the first quarter, Aluminum Association data show U.S. imports of aluminum can sheet reached 118.18 million pounds. That figure compares with 71.59 million pounds in Q1 2019 — a 65% jump.
Actual metals prices and trends
The Chinese aluminum scrap price increased 1.7% month over month to $2,020.36/mt as of Tuesday, Dec 1. LME primary three-month aluminum rose 10.9% to $2,022.5/mt.
Korean commercial 1050 aluminum sheet rose 2.6% to $3.15/kg, while its European equivalent increased 5.3% to $2,720/mt.
Chinese aluminum billet and aluminum bar rose 1.7% to $2,335/mt and $2,437/mt, respectively.
Chinese primary cash aluminum rose 15.2% to $2,579/mt.
Indian primary cash aluminum increased 10.3% to $2.25/kg.
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