Aluminum MMI: LME aluminum prices retreated from all-time high 

The Aluminum Monthly Metals Index (MMI) increased by 4.0%, as aluminum prices retreated from an all-time high.

Aluminum prices remain bullish

Aluminum prices showed downside price action and headed toward the previous month’s dips.
Such declines do not change the overall outlook toward the upside. Aluminum prices continue to form chart structures that suggest overall bullish market sentiment, specifically a bullish wave formation seen on longer time frames.
Prices can fall into a sideways market in the coming weeks until they begin to show signs of reversal toward the upside or downward, a potential indicator of a trend change.

China lockdowns, exports add temporary relief

After aluminum prices hit a new all-time high in the run-up to the nickel squeeze, prices retraced. Aluminum prices remain beneath that early March peak.
The aluminum market remains tight. China provided some relief which translated to aluminum price declines as a result of weakened demand due to ongoing lockdown policies and increased Chinese exports of primary aluminum.
In tight aluminum supply markets, buyers should carefully review best practice sourcing strategies. 
The world’s largest producer, China, stepped up primary aluminum exports in February, Reuters reported. In the wake of disrupted supply from Russia, China became a net exporter for the first time since 2019. China exported 26,378 tons of primary aluminum during the month, the largest monthly volume since 2010. The surge in exports added much-needed supply to international markets.

Imports to China also fell in February. The sharp rise of LME prices relative to SHFE prices made the shift toward exports particularly favorable.
Meanwhile, a wave of lockdowns across China throughout March curtailed demand from the largest metal consumer. As the world scrambles to replace Russia’s roughly 6% global aluminum market share for primary ingots,  China’s ongoing zero-COVID approach hit construction, production and manufacturing. The lockdowns will also likely slow semi-finished aluminum shipments.
The lockdown of Shanghai, the world’s largest container port and home to a currently offline Tesla factory, disrupted shipping, construction and auto production. Prior to Shanghai, lockdowns in the city of Shenzhen and the province of Jilin hit both technology and manufacturing production.
The lockdowns caused the most rapid downturn in factory activity in two years. The Caixin/Markit Manufacturing Purchasing Managers’ Index dropped from 50.4 in February to 48.1 in March. March’s month-over-month decline from growth to contraction represents the largest drop since February of 2020.

LME bans certain metals from British warehouses, doubles default fund

Following the U.K.’s March 15 announcement of a 35% tariff on goods including primary aluminum and aluminum alloy, the LME stopped deliveries into its British warehouses of certain Russian-produced metals exported after March 25. The LME’s ban limits the risk for the imposition of the additional tariff costs on buyers, though appears limited to those warehouses located in the U.K (namely Hull and Liverpool).
In spite of calls from numerous members, the latest move from the LME stopped short of a sweeping prohibition on Russian metals altogether.
The LME also nearly doubled its April default fund in order to hedge against possible future price spikes. According to a statement from the exchange, “due to increases in prices of all LME metals over the past month, the default fund is due to rise in April from $1.1 billion to $2.075 billion.”
While most of the increased default follows nickel’s historic price spike, aluminum prices remain at particular risk due to disrupted supply amid the ongoing conflict between Russia and Ukraine. The LME will draw the fund from its members mostly based on the volume of held contracts.

UK negotiates Section 232 tariff adjustment

Meanwhile, the U.K. became the latest recipient of tariff cuts from the U.S.
Effective June 1, up to 21,600 tons of aluminum products annually may enter the U.S. free of the 10% duty. The new agreement also allows limited volumes of steel imports free of the 25% duty imposed in 2018 and follows a similar agreement reached with the E.U.
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Actual metals prices and trends

The LME three-month aluminum price rose by 2.06% month over month to $3,518 per metric ton as of April 1.
Chinese primary cash aluminum rose by a nominal 0.32% to $3,585 per metric ton. Meanwhile, Chinese aluminum scrap declined by 2.3% to $2,531 per metric ton. Chinese aluminum billet fell by 0.61% to $3,577 per metric ton.
Meanwhile, European 1050 aluminum sheet held at $5,180 per metric ton.
Indian primary cash rose by 2.49% to $3.71 per kilogram.