The Aluminum Monthly Metals Index (MMI) increased by 7.0%. Prices remain historically high, with Chinese prices increasing the most this month.
Throughout July, LME aluminum traded mostly sideways until the last few days of the month when the price spiked. LME prices reached $2,619/mt on Aug. 1. Prices are close to the decade high of March 2011, when prices went over $2,700/mt. While prices remain high, trading volumes on the LME were lighter than the previous month with the exception of the last day of month when prices and volume peaked. Volumes declined since, signaling that the uptrend looks weak.
Chinese prices differ from the LME, trading consistently higher throughout July. Trading volumes were light though and only spiked on the last day of the month, signaling a similar trend to LME prices.
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Aluminum prices get U.S. Senate attention
The aluminum Midwest Premium price hit a record high of $0.32/lb at the end of July. The Midwest premium increase is driven by a rundown in Western warehouses and off-warrant inventory to locations convenient for onward shipment to China, which remains a net importer of unwrought aluminum since Q2 of 2020. Another driver was the 15% Russian export tax on aluminum, as Russia is the second-largest exporter of primary aluminum to the U.S.
The rapid aluminum price increase has caught the attention of the U.S. Senate and gained the support of trade associations. The Aluminum Pricing Examination (APEX) Act was reintroduced July 22. The bill would give the U.S. Commodity Futures Trading Commission the jurisdiction over the market, including the process, oversight, transparency and manner in which reference prices for aluminum premiums are set or reported.
Trade groups like the American Beverage Association, the Beer Institute, the Consumer Brands Association, the Flexible Packaging Association and the National Marine Manufacturers Association stated that the bill “will provide much-needed transparency to aluminum pricing. Aluminum is the largest commodity cost for brewers.”
The Aluminum Association reported that demand for aluminum in the U.S. and Canada increased by 18.3% during the first five months of 2021 compared to the previous year. While orders from aluminum mills increased by 26.2% year-on-year over the first half of the year. This demand and orders increase are signs of domestic growth.
Moreover, despite being a net importer, this June, China exported around 454,400 tons of unwrought aluminum and aluminum products, according to the General Administration of Customs of the People’s Republic of China, increasing by 3.5% compared to May and a year-on-year increase of 10.7%. This is in line with aluminum demand growth.
Actual metals prices and trends
LME three-month aluminum increased by 3.3% month-over-month to $2,619 per metric ton as of Aug. 1.
Chinese primary cash aluminum jumped by 5.8% to $3,068 per metric ton. Chinese aluminum scrap declined by 0.1% to $2,059 per metric ton. Meanwhile, Chinese aluminum billet went up by 28.7% to $3,065 per metric ton.
European 1050 aluminum sheet increased by 4.1% to $3,798 per metric ton.
Indian primary cash rose by 5.3% to $2.8 per kilogram.
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