Aluminum MMI: Price of Aluminum Falls, Tariffs Back On

Aluminum prices reacted bearishly in the short term. At the beginning of February, price action showed a short-term sideways trend with no new lows or highs. Indeed, the price of aluminum would need to break out of its current range to form a continuation trend or a reversal downward. However, future price direction currently remains unclear.

The Aluminum Monthly Metals Index (MMI) decreased 4.31% from February to March.

Does your company have an aluminum buying strategy based on current trends in the price of aluminum?   

Is Century Aluminum the Biggest Victor in Biden’s War on Russia?

Century Aluminum Company is a leading producer of primary aluminum in the United States. Unsurprisingly, the company recently announced its full support for the Biden administration’s tariffs on Russian aluminum imports, including Russian aluminum embedded in downstream articles. As with the previous Trump tariffs, the company claims that the excessive production of Russian aluminum has flooded the market, undercutting U.S. competitors.   

As of March 3, Century Aluminum’s shares were up more than 20% following the announcement of the tariffs. This surprised few who were aware of how they would affect the availability and price of aluminum in the U.S. Alcoa, which has its headquartered in Pittsburgh, also welcomed the imposition of tariffs on Russian aluminum. Moreover, the company continued to advocate for additional fair trade practices. 

Of course, it’s important to revisit what happened in 2018 after the imposition of the Trump tariffs:

Do U.S. Aluminum Buyers Have a New Hedging Tool With CME Aluminum Futures?

The CME Group introduced Aluminum (ALI) futures contracts roughly a year ago. Since then, it has continued to provide a new hedging tool for U.S. aluminum buyers. Indeed, unlike its Midwest premium futures contract (AU), the ALI futures contract allows for the management of price exposure for primary ingot through to delivery. It also includes the MW premium. In fact, Bonnell Aluminum, a US-based aluminum extruder, recently began using CME Group contracts as a hedging tool to manage underlying price risk.

Ultimately, this new tool is significant for the U.S. aluminum industry. Many experts believe it will significantly benefit buyers, producers, and traders looking to manage price risk.

MetalMiner plans to release its quarterly revision to the Annual Outlook in March. The report consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental and technical factors driving prices. The report also includes a detailed forecast to use when sourcing metals for 2023. The highlights include expected average prices, support and resistance levels, and specific buying strategies.

CME Aluminum Futures Builds Liquidity

As previously mentioned, the United States will impose a 200% tariff on aluminum produced in Russia. The tariff officially goes into effect on March 10, 2023. However, traders report that the market response has mostly remained muted. Indeed, prices would have skyrocketed if the U.S. had imposed sanctions instead of tariffs.

For instance, in 2018, the U.S. Treasury Department imposed sanctions on Rusal. This led to a surge in both LME aluminum prices and the duty-paid physical premium paid by U.S. buyers. U.S. aluminum premiums, currently around $650 a ton, have risen by over 40% since October 2022. This is when the discussion of tariffs on Russian metal began. The muted reaction could also be a response to the drastically reduced significance of Russia as a supplier to the U.S. market as compared to 2018.

The MetalMiner Insights platform includes global aluminum prices, premiums, forecasts, and specific monthly buying strategies. Request a 30-minute demo of the MetalMiner Insights platform now.

Notable Trends in the Price of Aluminum

• European 5083 plate increased sharply by 8.83%, leaving prices at $5828.22 per metric ton.
• Chinese aluminum bar fell in price by 3.02%. Prices at month’s start sat at 2877.11, however, the cost of Chinese aluminum bar has continued to steadily rise since the beginning of March.
• LME aluminum (primary 3 months) fell drastically by 10.67%. This brought prices to $2,360 per metric ton.
• Finally, Korean commercial 1050 sheet traded completely flat, remaining at $3.53 per kilogram.