Aluminum MMI: Physical delivery premium continues to rise

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The Aluminum Monthly Metals Index (MMI) jumped 7.7% for this month’s reading, as the aluminum physical delivery premium continues to rise.

May 2021 Aluminum MMI chart

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Delivery premium continues to rise

aluminum ingot stacked for export

Olegs/Adobe Stock

The US Midwest Premium, like just about everything else these days, continued to inch upward in recent weeks.

After falling to $0.12 per pound in early February, the premium has more than doubled since then. The Midwest Premium hit $0.26 per pound ($573 per metric ton) to close last week.

As MetalMiner’s Stuart Burns noted previously, rising delivery premiums are an indicator of market tightness.

“China’s pull on the rest of the world’s aluminium supply does not appear to be abating,” Burns explained last month.

“Beijing has tried to cool speculative activity, which is undoubtedly playing a part in the SHFE price premium.”

In addition, he said elevated premiums are likely to remain a feature of the market the rest of this year.

Global aluminum production rises in March

According to the International Aluminum Institute, global primary aluminum production reached 5.73 million metric tons in March.

That marked an increase from 5.45 million metric tons in March 2020.

Meanwhile, China’s output increased from 3.00 million metric tons in February to 3.31 million metric tons in March. The jump, however, is not surprising, given the usual economic slowdown during China’s Lunar New Year holidays in February.

LME aluminum stocks

LME aluminum stocks totaled 1.89 million metric tons to open April, according to official LME warehouse data.

Meanwhile, LME stocks fell to 1.83 million tons as of May 4.

Century Aluminum reports Q1 results

In its Q1 earnings report, Century Aluminum cited higher aluminum prices and regional premiums behind its 14% jump in sales.

Sales reached $444 million in Q1, the firm said. However, it reported a net loss of $140 million, $87.4 million of which came in the form of special items.

“Industry conditions have continued to improve, reflecting the pace and level of general manufacturing activity,” President and CEO Michael Bless said. “The global primary aluminum market is in balance, and global inventories continue to fall. The availability of prompt metal units in our key markets remains constrained, driven by robust demand and the limited global capacity additions. The outlook for the industry remains uniformly healthy.”

Rusal begins test deliveries of new aluminum product

Last month, En+ Group, parent group of Russian aluminum giant Rusal, announced it had produced record-breaking high purity aluminum.

In a release, En+ said the aluminum’s purity reached 99%. Furthermore, it said emissions from the production process amounted to less than 0.01 tonnes of CO2 equivalent per tonne of metal. That is 10 times lower than the industry average, the Russian firm said.

Rusal has been at the forefront of the aluminum industry vis-a-vis greener production processes. The company says over 90% of its aluminum comes from clean and renewable hydroelectric power.

This month, Rusal announced it had begun test deliveries of the new aluminum, produced using inert anode cells.

“RUSAL encourages prospective partners and market leaders to test a pilot batch of this aluminum produced by the company using inert anode technology,” the company said. “Combined with renewable hydropower, inert anode technology provides an unprecedented low carbon footprint in metal production – less than 0.01 tonnes of CO2 equivalent per ton of metal (Scope 1, Scope 2 – direct and indirect emissions).”

In other company news, Rusal reported Q1 aluminum production of 932,000 tonnes, down 1.9% from the previous quarter. Meanwhile, Rusal’s production of alumina output fell by 4.5% to 2.05 million tonnes.

Actual metals prices and trends

LME three-month aluminum rose by 9.1% month over month to $2,438 per metric ton as of May 1.

Chinese primary cash aluminum jumped 10.4% to $2,908 per metric ton. Chinese aluminum scrap rose by 1.3% to $2,209 per metric ton. Meanwhile, Chinese aluminum billet picked up by 1.3% to $2,374 per metric ton.

European 1050 aluminum sheet jumped by 10.0% to $3,562 per metric ton.

Indian primary cash rose by 7.8% to $2.62 per kilogram.

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