This month the Aluminum Monthly Metals Index (MMI) remained flat, as the Department of Commerce announced the creation of a new Aluminum Import Monitoring and Analysis system.
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New Aluminum Import Monitoring system
On Dec. 23, 2020, the U.S. Department of Commerce announced the creation of the Aluminum Import Monitoring and Analysis (AIM) system.
The system, similar to the Steel Import Monitoring and Analysis (SIMA) system, will collect and publish data on aluminum imports into the U.S.
The system will allow users to track trade flows more easily to help spot trends earlier and to provide better guidance to the domestic industry and government. Likewise, better data collection and its analysis should allow domestic producers to compete on a level playing field.
The system is expected to be available on Jan. 25, 2021.
LME aluminum changes
The London Metal Exchange announced its intention to move forward with its sustainability strategy after receiving market feedback. Part of the strategy will include a spot trading platform for price research and trading of low-carbon aluminum for interested buyers and sellers.
As part of this strategy, the LMEpassport, a digital credential register, will be launched to allow greater visibility of carbon sustainability criteria.
The LME will implement it gradually over three years across its physically settled metals requiring Certificates of Analysis (CoAs) and other value-add information to facilitate disclosure under existing standards across metal brands. The service will start in 2021 and will initially focus on aluminum.
Moreover, the LME will launch new cash-settled contracts for aluminum, among other metals, on June 14, 2021. These contracts are for European aluminium premiums and U.S. aluminium scrap with the purpose of supporting the electric vehicle transition and the circular economy (an economic system aimed at eliminating waste and the continual use of resources).
Scrap supply tightens in the U.S.
By the end of 2020, the aluminum price had recovered by 36.8% since its low in April. This is due to strong demand in the U.S. and the Chinese market.
This has benefited aluminum producers. For example, Alcoa reported an 11% sequential increase in sales volume of value-add aluminum products over its Q3 2020 results. The climate has also benefited the scrap domestic market.
Last month, Andy McKee, materials trading division president for Schupan, told Recycling Today that aluminum scrap generation is inconsistent across various manufacturing sectors, as some customers have to stockpile material at their homes due to pandemic lockdowns despite growing demand.
However, aluminum scrap did not have to wait for mills to take it, as demand remains strong, particularly in the can sector. McKee mentioned contract metals for 2021 saw a small uptick. Furthermore, mills have lost some leverage compared to the past few years.
Moreover, according to Recycling Today, Davis Index, a metals scrap benchmark provider, reported “that secondary aluminum producers in the U.S. were paying spreads narrowing by the day for most aluminum scrap grades.”
Davis Index also mentioned the pressure the export market is exerting. The scrap benchmark provider noted zorba (a mix of shredded and pre-treated non-ferrous metals) pricing was “breaking 70 cents per pound and moving higher.”
Actual metals prices and trends
The Chinese aluminum scrap price increased 1.9% month over month to $2,058.39/mt as of Friday, Jan. 1. Meanwhile, LME primary three-month aluminum dropped 1.9% to $1,980.50/mt.
Korean commercial 1050 aluminum sheet rose 4.8% to $3.30/kg. Its European equivalent increased 0.1% to $2,722/mt.
Chinese aluminum billet and aluminum bar rose 1.9% to $2,379/mt and $2,483/mt, respectively.
Chinese primary cash aluminum dropped 6.0% to $2,424/mt.
Indian primary cash aluminum increased 1.8% to $2.29/kg.
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