aluminum price

copper mine

Gary Whitton/Adobe Stock

This morning in metals news: Turquoise Hill Resources offered an update on the Oyu Tolgoi copper mine expansion project; renewable power generation will continue to rise this year in the U.S.; and the aluminum price has traded sideways over the last month.

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Oyu Tolgoi copper mine project in danger

The fate of the Oyu Tolgoi copper mine expansion project is up in the air, as it could face termination from the Mongolian government.

Turquoise Hill Resources, which is majority-owned by miner Rio Tinto, jointly owns the massive project with the Mongolian government. The parties reached a financing plan for the project in 2015.

However, the Mongolian government appears to be concerned about runaway costs for the project.

“In addition, the Government of Mongolia has advised Rio Tinto that it is dissatisfied with the results of the Definitive Estimate, which was completed and delivered by Rio Tinto and publicly announced by the Company on December 18, 2020, and is concerned that the significant increase in the development costs of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive therefrom,” Turquoise Hill said in a statement. “The Government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed.”

Renewables continue to rise

Renewable sources account for the most new electricity-generating capacity this year, the Energy Information Administration reported.

“According to the U.S. Energy Information Administration’s (EIA) latest inventory of electricity generators, developers and power plant owners plan for 39.7 gigawatts (GW) of new electricity generating capacity to start commercial operation in 2021,” the EIA reported. “Solar will account for the largest share of new capacity at 39%, followed by wind at 31%. About 3% of the new capacity will come from the new nuclear reactor at the Vogtle power plant in Georgia.”

Aluminum trends flat

After surging throughout most of the second half of 2020, the aluminum price has slowed down of late.

The LME three-month aluminum price is up just 0.22% over the last month. The price closed Friday at $2,032 per metric ton.

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aluminum ingot stacked for export

Olegs/Adobe Stock

This month the Aluminum Monthly Metals Index (MMI) remained flat, as the Department of Commerce announced the creation of a new Aluminum Import Monitoring and Analysis system.

January 2021 Aluminum MMI chart

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New Aluminum Import Monitoring system

On Dec. 23, 2020, the U.S. Department of Commerce announced the creation of the Aluminum Import Monitoring and Analysis (AIM) system.

The system, similar to the Steel Import Monitoring and Analysis (SIMA) system, will collect and publish data on aluminum imports into the U.S.

The system will allow users to track trade flows more easily to help spot trends earlier and to provide better guidance to the domestic industry and government. Likewise, better data collection and its analysis should allow domestic producers to compete on a level playing field.

The system is expected to be available on Jan. 25, 2021.

LME aluminum changes

The London Metal Exchange announced its intention to move forward with its sustainability strategy after receiving market feedback. Part of the strategy will include a spot trading platform for price research and trading of low-carbon aluminum for interested buyers and sellers.

As part of this strategy, the LMEpassport, a digital credential register, will be launched to allow greater visibility of carbon sustainability criteria.

The LME will implement it gradually over three years across its physically settled metals requiring Certificates of Analysis (CoAs) and other value-add information to facilitate disclosure under existing standards across metal brands. The service will start in 2021 and will initially focus on aluminum.

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aluminum ingot stacked for export

Olegs/Adobe Stock

As we continue our review of the best of 2020, let’s take a quick look back at the top aluminum stories of the year.

Previously, we reviewed the most-viewed posts of the year overall and the most-viewed steel-centric posts of the year.

Today, we’ll take a look at aluminum, which has also been on the rise in the second half of the year. The LME three-month price bottomed out at $1,460 per metric ton in April. Since then, however, the price has surged, reaching as high as $2,062 per metric ton in early December.

Like steel, prices have continued to rise. Will that trend continue in 2020? That remains to be seen, of course. However, as MetalMiner’s Stuart Burns outlined in October, Goldman Sachs is bullish on commodities in 2021.

Before we turn the page, let’s first take a look back at the best of 2020.

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Best of 2020: top aluminum posts of the year

  1. Trump expands Section 232 tariffs on steel, aluminum derivatives
  2. Aluminum price is pulled this way and that on rising trader interest, supply glut
  3. Aluminum MMI: Demand weakness leads to further price deterioration
  4. China’s aluminum production continues on through COVID-19 crisis
  5. Aluminum MMI: Demand uncertainty weighs on aluminum prices
  6. Aluminum MMI: Aluminum price makes gains, index rises 6.7%
  7. Aluminum MMI: Aluminum price climbs despite overwhelming supply
  8. Aluminum MMI: Aluminum prices continue to receive support
  9. China’s aluminum supply chain trauma on the heels of the coronavirus outbreak
  10. Aluminum MMI: Chinese aluminum demand remains strong, imports surge

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hot-rolled coil steel

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This morning in metals news: U.S. Steel sold the Keystone Industrial Port Complex for $160 million; ArcelorMittal and Nippon Steel will build a new electric arc furnace at their joint venture in Alabama; and, finally, the aluminum price has retraced slightly in December.

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U.S. Steel sells Keystone Industrial Port Complex

U.S. Steel recently announced it has closed on the sale of its Keystone Port Industrial Complex in Fairness Hills, Pennsylvania.

The sales of the “non-core real estate asset” comes for $160 million.

 ArcelorMittal, Nippon Steel to build Alabama EAF

Nippon Steel said it and ArcelorMittal would bring a new electric arc furnace to their joint venture in Calvert, Alabama.

The steelmaker it expects production to begin in the first half of 2023.

The Calvert facility is a 50:50 joint venture of the two firms.

“Calvert currently produces steel sheet products by processing semi-finished products (slabs) procured from domestic and overseas suppliers,” Nippon Steel said in a Dec. 22 announcement. “With the newly-built EAF, Calvert will be able to manufacture by itself part of slabs necessary to produce its steel sheet products and will strive for further strengthening its competitiveness through advantages of the self-manufacture, such as shortening lead time in slab procurement, improving its productivity through utilization of self-manufactured high temperature slabs, and increasing the domestic procurement ratio of slabs.”

Aluminum pulls back

Like many metals, aluminum has been on a steady rise since May.

However, in December, aluminum has pulled back a little bit.

The LME three-month aluminum price remains up 2.2% month over month after closing last week at $2,025 per metric ton. Meanwhile, the metal started the month just north of $2,060 per metric ton.

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China is going through a purple patch at the moment, particularly the Chinese aluminum sector.

An early and strong rebound from Q1 lockdowns and significant stimulus investment that has made its way into property and infrastructure activity have boosted demand for all the base metals.

However, aluminum has arguably seen the biggest benefit.

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Chinese aluminum sector sees rising bauxite, alumina imports

A recent post by ING notes China’s strong imports in aluminum-related raw materials — notably bauxite and alumina — continued in the second half.

Bauxite imports in the first 10 months grew by 14% year over year to around 96 million metric tons. Total alumina imports, meanwhile, rose by 205% to 3.1 million tons.

As we reported last month, primary metal imports, while easing now, have been a surprise feature this summer. Total imports in the first 10 months hitting 878 ktons, or 14 times higher than the same period last year, ING reports.

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As the World Bureau of Metal Statistics (WBMS) will tell you, the global aluminum market reached a surplus of 1,603 kt in the January to September 2020 period.

That tripled the surplus of 480 kt recorded for the whole of 2019.

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Global aluminum market sees rising production

Production continued to rise in China. In addition, production made a strong comeback in North America, where it rose 4.3% year over year, according to Capital Economics, largely due to the recovery of Alcoa’s Becancour smelter in Canada.

Chinese output grew 3.8% to nearly 31 million tons in the January to October period. Even so, demand still outstripped supply. The country imported some 766 kt of primary metal, according to Reuters.

Despite Chinese demand — or maybe because of it — an estimated 3.2-million-ton global surplus will build this year, according to CRU estimates. Some 2.9 million tons of that tonnage will occur outside of China.

Aluminum stocks and demand

Yet if ever there was an example of how exchange stocks are no indication of demand, LME inventory levels actually fell this year (down by 53 kt so far).

Surplus production has a way of disappearing off the radar in the aluminum market. The stock and finance trade soaks up excess production and profitably stores it away on the back of a strong LME forward price curve.

The portion that is visible via the LME’s off-warrant reporting structure doubled from 730 kt in February to 1.56 million tons by September. That figured has continued to climb since.

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As we noted yesterday, aluminum prices have continued to rise — this in spite of increasing global aluminum production.

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Global aluminum production rises 3.5%

According to the latest data from the International Aluminum Institute, global aluminum production rose 3.5% in October from the previous month.

October output reached 5.59 million metric tons, up from 5.40 million metric tons in September.

Global aluminum production rose 4.5% year over year from 5.35 million metric tons in October 2019.

China output chugs along

Meanwhile, aluminum production in China totaled an estimated 3.23 million metric tons in October, up from 3.13 million metric tons the previous month.

Furthermore, China’s production reached 2.98 million metric tons in October 2019.

Despite gains in output, the aluminum price has continued to rise. Since the LME three-month price’s April trough, aluminum is up 37%.

As MetalMiner’s Stuart Burns explained last week, China’s metals demand has supported prices this year, even as other economies are not quite as far along in their respective economic recoveries.

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aluminum price

Grispb/Adobe Stock

This morning in metals news: the LME three-month aluminum price has continued to rise in the leadup to the Thanksgiving holiday; Rio Tinto signed a new agreement to strengthen its partnership with China’s Tsinghua University; and, lastly, New York state is one of the U.S. leaders in renewable energy generation.

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LME three-month aluminum prices gains

Like other metals, the LME three-month aluminum price has showed significant upward momentum this year.

The LME-three month aluminum price closed last week at $1,995 per metric ton. Aluminum is up 8.22% from the previous month.

Furthermore, since its April trough, the price has increased 37%.

Rio Tinto strengthens partnership with Tsinghua University

Miner Rio Tinto announced it is strengthening its partnership with China’s Tsinghua University.

The firm said it is committing an additional 30 million yuan ($4.5 million) over the next five years to support research projects at the Tsinghua-Rio Tinto Joint Research Centre for Resources, Energy and Sustainable Development.

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This month the Aluminum Monthly Metals Index (MMI) rose by 3.5%, as the aluminum price made gains in October.

November 2020 Aluminum MMI chart

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Aluminum prices and demand increase

The LME aluminum price reached a 17-month high on Oct. 16 at $1,863.50/mt. The price has increased over 27% since its pandemic low of $1,459.50/mt. Prices dropped the last week of October but have since recovered sharply.

The aluminum price continues to rise along with demand.

According to the JP Morgan Global Manufacturing PMI, global manufacturing activity increased to 53.0 in October. The October reading marked the PMI’s best in 29 months. In the the North American market, the U.S. and Canada saw increases in new orders and production, along with Germany.

In Asia, manufacturing rose rapidly in China, India and South Korea.

The recent sharp increase in coronavirus cases — and consequent lockdowns — could be a risk to the improving manufacturing sector, particularly in Europe.

In the manufacturing sector, aluminum is used for construction, packaging and transport.

Strong demand in China

China continues to show signs of strong aluminum demand.

Unwrought aluminum and aluminum product imports remained high at 355,999 metric tons during September despite decreasing compared to 426,469 metric tons in August.

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hot rolled steel

niteenrk/Adobe Stock

This morning in metals news: the U.S. steel sector’s capacity utilization rate for the week ended Oct. 31 jumped to 70.4%; Cleveland-Cliffs said the Trump administration will take action under Section 232 vis-a-vis imports of laminations and imported grain-oriented electrical steel (GOES); and, finally, the LME three-month primary aluminum price picked up to start the week.

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Steel capacity utilization rises to 70.4%

The U.S. steel sector’s capacity utilization rate continued to make incremental gains last week, according to the American Iron and Steel Institute (AISI).

U.S. steel mills tallied a capacity utilization rate of 70.4% during the week ended Oct. 31, up from 69.7% the previous week.

Production during the week ended Oct. 31 reached 1.56 million net tons, up 1.0% from the previous week. The weekly total, however, marked a 13.7% year-over-year decline.

Cleveland-Cliffs praises Trump administration for Section 232 action

Earlier this year, the Trump administration launched a Section 232 probe covering laminations and wound cores.

On Monday, Cleveland-Cliffs praised the Trump administration, saying it planned to take action using Section 232.

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