The Aluminum Monthly Metals Index (MMI) went up by 3.1% this month, as all forms of aluminum jumped this month.
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Primary capacity interest
Historically high prices, increasing demand and production cuts in China have opened a window of opportunity for aluminum producers.
Alcoa announced it is restarting the Alumar aluminum smelter in Sao Luis, Brazil. Alcoa owns 60% of the smelter, while South32 owns 40%. Operations were suspended in 2015, as aluminum prices declined. Its restart could bring a total operating capacity of 447,000 metric tons, with the first molten metal expected in the second quarter of 2022.
With this planned restart, Alcoa will have approximately 80% of its 2.99 million metric tons of global aluminum smelting capacity in operation.
Moreover, South32 announced its intention to exercise its pre-emptive rights to acquire up to an additional 25% shareholding and related rights in Mozal Aluminium from Mitsubishi. At the end of the transaction, South32 would have ownership of up to 72.1% of the smelter, located in Maputo, Mozambique. The smelter has a total operating capacity of approximately 580,000 metric tons.
Mill capacity continues to grow
Production facilities and rolling mills continue to open amid high prices.
Service Center Metals plans a major expansion to its operations in Virginia to meet increasing customer demand. The expansion includes the building of two new facilities: a 91,000-square-foot aluminum extrusion plant and a 170,000-square-foot compact remelt plant. This expansion adds a third aluminum extrusion press. The plant will make aluminum rods, bars and tubing.
Chance Aluminum plans to reopen an aluminum facility in Williamsport, Pennsylvania, which it recently purchased from JW Aluminum. The facility will manufacture aluminum foil and other common alloy coils. The company expects to install additional equipment to transform the facility into a fully integrated, state-of-the-art aluminum rolling mill.
According to Recycling Today, a nonferrous trader with a scrap processing company based in the northeast said demand for secondary aluminum scrap has declined compared to demand for primary grades of scrap for much of 2021. This trend is due to the semiconductor shortage that is constraining automotive industry production, which consequently has affected the demand for cast aluminum products made from secondary aluminum.
On the other hand, Metal Source, which operates scrap yards and produces 356 aluminum sow and ingot, de-ox products and 380 aluminum sow and ingot, suggested that demand for the aluminum grades they process remains consistent. Metal Source processes aluminum wheels, engines, old cast, turnings and foundry dross.
Metal Source’s vice president, Colin Denihan, expects export demand for aluminum scrap to strengthen in the final quarter of this year, as the aluminum price remains high. He even said buyers “are trying to source anything with silicon or that is a prime equivalent, not just secondary grades.”
Actual metals prices and trends
LME three-month aluminum increased by 8.1% month over month to $2,881 per metric ton as of Oct. 1.
Chinese primary cash aluminum jumped by 6.7% to $3,506 per metric ton. Chinese aluminum scrap slightly went up to $2,061 per metric ton from $2,059 per metric ton last month. Meanwhile, Chinese aluminum billet went up by 7.9% to $3,539 per metric ton.
European 1050 aluminum sheet increased by 9.9% to $4,713 per metric ton.
Indian primary cash rose by 4.6% to $3.1 per kilogram.
More MetalMiner is available on LinkedIn.