Aluminum MMI: Aluminum prices remain historically high

The Aluminum Monthly Metals Index (MMI) increased by 0.9% this month, as aluminum prices traded mostly sideways but remained historically high.

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Aluminum prices

Throughout June, LME aluminum prices cooled off. However, in the last week of the month, prices picked up and surpassed the $2,550/mt mark by the first week of July.
Trading volumes during the first week of July were lower than the June average of 14,426 metric tons. Volumes were heavier on days when the price went down, meaning there is no strong market signal.
Chinese prices trended differently from their LME counterpart. Chinese aluminum prices traded sideways throughout June and the first week of July. In June, trading volumes approximately tripled as the price went up but immediately declined, along with the price which could signal a bullish market.

Russia to impose export tax on metals

The economy minister of Russia, Maxim Reshetnikov, announced that the government was contemplating adding an export duty of at least 15% for steel, nickel, aluminum and copper, effective Aug. 1 through the end of the year.
The measure comes as an effort to protect its defense and construction industries as metal prices continue to rise globally.
However, these tariffs could have a particularly negative global implication for the aluminum market. Rusal controls about 10% of the global aluminum sector.
Moreover, Russia is the second-largest exporter of primary aluminum to the U.S. As such, the U.S. domestic aluminum market would feel an even bigger squeeze, causing further increases in the Midwest premium.

Tight supply

According to Bloomberg, buyers in Japan agreed to pay a premium of $185 per ton above LME prices for the coming quarter, the highest in six years.
This is a sign of a tight aluminum market. As the World Bureau of Metal Statistics reported this month, the aluminum market from January to April 2021 posted a deficit of 588,000 tons.
The deficit is due to a rapid turnaround in the economy. Demand slowed as travel declined early on during the pandemic but has since snapped back strongly.
The price rally has triggered several countries to take measures to help put a cap on price increases. Russia appears poised to implement export tax changes. Furthermore, China plans to release strategic reserves of the metal for the rest of the year.

New aluminum recycling plant

Norwegian industrial company Hydro Aluminum Metal signed a letter of intent to purchase a property in Cassopolis, Michigan, with the objective of building an aluminum recycling plant. The plant will produce aluminum extrusion ingot for use in critical automotive applications, in addition to other transportation and building systems.
The plant is estimated to cost a total of $120 million with a 120,000-metric ton capacity. The final product will be Hydro’s signature “Hydro CIRCAL® extrusion ingots, which contain at least 75% post-consumer scrap certified by third party auditors DNV GL.” The ingots have a CO2 footprint of 2.3 kg CO2e/kg aluminum, Hydro said.

Actual metals prices and trends

LME three-month aluminum increased by 4.1% month over month to $2,535 per metric ton as of July 1.
Chinese primary cash aluminum decreased by 2.0% to $2,901 per metric ton. Chinese aluminum scrap declined by 1.3% to $2,060 per metric ton. Meanwhile, Chinese aluminum billet went down by 1.3% to $2,380 per metric ton.
European 1050 aluminum sheet increased by 2.0% to $3,649 per metric ton.
Indian primary cash declined by 2.2% to $2.266 per kilogram.
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