aluminum price

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Global aluminum production reached 5.25 million metric tons in June, the International Aluminum Institute reported Monday.

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The June total marked a decline from the 5.43 million metric tons produced in May and the 5.33 million metric tons produced in June 2018.

China led the way with 2.96 million metric tons produced in June, down from the 3.05 million metric tons produced in June 2018.

Asian production ex-China reached 360,000 metric tons, down from 368,000 tons in June 2018.

Production in the Gulf Cooperation Council (GCC) countries reached 449,000 metric tons, up from 437,000 metric tons in June 2018.

Production in east and central Europe reached 344,000 metric tons, up from 333,000 metric tons in June 2018.

In western Europe, production reached 284,000 metric tons, down from 310,000 metric tons in June 2018.

North American aluminum production hit 314,000 metric tons, up from 303,000 metric tons in June 2018.

African production hit 135,000 metric tons, down from 140,000 metric tons in June 2018.

South American production reached 95,000 metric tons, up from 88,000 metric tons in June 2018.

In other aluminum news, aluminum producer Alcoa announced the planned restart of its Aluminerie de Bécancour Inc. smelter in Quebec, Canada, after it reached a six-year labor agreement with the United Steelworkers Union.

The smelter, majority-owned by Alcoa, has an annual capacity of 413,000 tons. The restart is scheduled to begin Friday, July 26, and is expected to be complete during the second quarter of 2020, the company said.

The company forecast a global aluminum deficit ranging between 1.0 million tons and 1.4 million tons for 2019, down from last quarter’s forecast of a range of 1.5 million tons and 1.9 million tons.

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In addition, the company forecast global aluminum demand growth ranging between 1.25-2.25%, down from a previous forecast of 2-3%. The decline in the growth forecast was “driven by lower demand in both China and the world ex-China due to trade tensions and macroeconomic headwinds,” the company said.

The Aluminum Monthly Metals Index (MMI) held steady at 86 this month based on mixed price movements. While prices in China dropped in the 1% to 2% range, all other prices in the Aluminum MMI basket rose slightly.

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LME aluminum prices continued to fall into June, but recovered toward the end of the month. LME prices are currently moving sideways at around $1,800/mt, with the present price slightly higher at $1,807/mt.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

Due to lower LME prices, a recent forecast for Indian production projects a slowdown in output growth. Domestic production costs increased by around 25% during the past three to five years, putting break-even costs above the current LME price, which was at $1,777/mt in late June.

According to Reuters, Japanese aluminum premiums increased 3% to $108/ton for Q3 due to tighter aluminum supplies in Asia. Japanese producers initially sought increases to the $115-$120 per ton range. Weakness in the semiconductors market and trade worries capped gains.

Chinese Aluminum Prices

SHFE aluminum prices weakened during the past month, reversing the upward trend evident since around February 2019. Demand appears seasonally weaker at this time; therefore, market observers will want to watch prices carefully during the next month or two to see if the downtrend continues.

Source: MetalMiner analysis of Fastmarkets

In a normal cycle, prices might rise again as China moves away from seasonally hot and rainy weather.

According to a recent Reuters report, China’s aluminum production increased by 2.4% in May compared with May 2018 because of smelter restarts in response to higher prices, which could also contribute to the recent weakness.

Price weakness appears to be temporary. If prices do not increase, this will indicate a weaker-than-expected Chinese economy and/or that output continues to increase, with increased supply capping price gains.

Increased Aluminum Use on the Horizon Across Sectors

Aluminum prices may also receive future support from innovations beyond just the automotive sector, based on the metal’s flexibility and lightweight profile.

The Indian government announced that railway coach cars will transition to aluminum, while older conventional stock will begin a phaseout.

Coca-Cola announced its AQUAFINA® water brand will see an aluminum can package in U.S. food service outlets. The announcement comes as part of the company’s greater move to reduce the use of plastic packaging.

U.S. Aluminum Premiums

The U.S. Midwest Premium finally dropped, but only slightly, to $0.18/lb. With aluminum prices rising in most countries, supply tightness may continue to support the premium. The U.S. Midwest Premium still remains stubbornly high since the the U.S. removed its aluminum tariffs on Canadian and Mexican aluminum in May.

What This Means for Industrial Buyers

Price signals were mixed this month, with weaker Chinese prices contrasting with higher prices in the rest of the world. Global production increased, but not enough to offset overall tightness in terms of supply.

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Actual Metal Prices and Trends

Chinese prices dropped again this month, in the range of 1-2%. The Chinese primary cash price dropped 1.6% to $2,013/mt, while Chinese aluminum scrap fell 1.7% to $1,835/mt. Billet and bar prices dropped by 1.6% and 1.5%, respectively, to $2,080/mt and $2,177/mt.

This month, European prices increased. European commercial 1050 sheet increased by 2.3% to $2,553/mt, while the 5083 plate price increased by 2% to $3,011/mt.

Korean commercial 1050 sheet, 5052 coil premium over 1050, and 1050 all increased by around 2% to $3.1, $3.14 and $3.27 per kilogram, respectively.

India’s primary cash price increased 1% to $2.09 per kilogram.

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The LME primary 3-month aluminum price held essentially flat, increasing 0.28% increase to $1,794/mt.

Aluminum base prices on the London Metal Exchange (LME) have been sliding for the last couple of months, suggesting we have a market in surplus.

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So when the United States removed tariffs on imported steel and aluminum from Canada and Mexico last month, you would have expected the resulting flood of lower-priced aluminum would have driven down the Midwest Premium.

No such luck.

Despite a minor blip, it has remained stubbornly elevated at over USD $400 per ton, raising howls of protest from consumers (particularly in the beverage can market).

But before we accuse primary mills of gouging the market, let’s consider some points made by Andy Home in a Reuters article this week.

First, some context supporting the consumers’ position. Canada accounted for some 51% of aluminum supply to the U.S. market in 2018, with Australia, Argentina (who were exempted from the start) and now Mexico making up another 8%, so that nearly 60% of supply is now duty-exempt.

Yet prices have not really shifted despite jumping from $0.10/lb before the tariffs were announced to over $0.22/lb now – well above the 10% (about $0.08-$0.09/lb) that could reasonably be attributed to the tariff.

That raises the question as to what is really going on: if elevated Midwest Premiums are not really reflecting the 232 10% import tariff as many have maintained, then why do they remain elevated? Does their persistence after the tariff removal mean they may be a long-term feature of the market?

Technically the Midwest Premium has generally been explained as the cost of delivery to a U.S. consumer, largely reflecting haulage costs.

But while it is a reflection of that, it is also much more, Home suggests.

The CME contract traded volumes equivalent to almost 2.5 million tons last year, not just from trade hedging but as a market in its own right. The U.S. market remains incredibly tight. Prices aside, the loss of some 350,000 tons of supply from the Becancour smelter in Canada due to a lockout has not even begun to be replaced by domestic U.S. restarts amounting to only some 90,000 tons.

The market has continued to grow, but supply is constrained – surely that should be reflected in the LME price, you may ask?

Yes, in a fully functioning market it should be. The U.S. isn’t a market isolated from the rest of the world — so what are premiums doing elsewhere?

Rotterdam P1020 duty-unpaid premiums rose to about U.S. $100 per metric ton this month, up from $90-$95 per metric ton late last month. However, duty-paid premiums in less-traded and lower-volume Mediterranean markets, like Spain, eased slightly to U.S. $350-$360 per metric ton from a shade higher last month (not far off Midwest Premium levels, according to AluminiumInsider).

Premiums in South America are even higher, reaching U.S. $500 per ton in Brazil. The premiums are not reflecting the scarcity of metal, per se, so much as the scarcity of metal in a particular location.

But if some justification for the premium can be made, what about the elevated prices being paid by consumers despite a declining LME? Home has some thoughts for us on that, pointing to the revenue earned by suppliers in this elevated market, noting the U.S. government collected only around $50 million in tariffs.

Some of the difference, an estimated $27 million, went to U.S. primary aluminum smelters. The bigger part, $173 million, went to U.S. rolling mills. The latter, according to the article, have been pricing their can stock to include the 10% tariff, even though primary metal only accounts for around 30% of the input (the rest is scrap).

The beverage market is far from alone in this. For those consumers who do not break down the raw material, delivery premium and value-add elements of their pricing, mills have managed to push through price increases in excess of 10% on the back of less than 10% cost increases.

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Consumers, then, do have grounds for discontent.

What they do about it in the face of a still tight market for many grades is tough, but breaking out base metal, premium and gaining as much transparency as possible into the value-add is a big first step. It provides data for negotiation and a structure for analyzing price changes with greater power in the hands of the buyer.

In a difficult market, consumers need all the tools they can lay their hands on.

This month the Aluminum Monthly Metals Index (MMI) decreased, with weakness coming from all the prices tracked globally. The index value dropped back two points to 86, back to February levels after holding at 88 for three months.

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LME aluminum prices occasionally spiked in May. Prices showed some sideways price movement, yet continued to trend down overall. In early June, the closing price hit a new low for the year at $1,773/mt.

Source: MetalMiner analysis of FastMarkets

Source: MetalMiner analysis of FastMarkets

Looking at the past six months on the chart above, it’s a little easier to see that prices recently also dropped below January 2019 levels, signaling further price weakness could be on the horizon should relevant industries continue to slow at major growth engine points.

Aluminum Supply Deficit Forecast for 2019

According to a recent investor presentation prepared by Alcoa, the primary aluminum deficit will be between 1.5 million and 1.9 million metric tons. The Chinese market will remain supplied or slightly in surplus at 0.2 million mt of overage, with the deficit projected for the world ex-China.

Global inventory days continue to trend downward overall. After topping out at 119 days in 2009, they now hold at a projected 59 days of global consumption for the 2019 (down from a 70-day average last year).

Source: MetalMiner analysis of FastMarkets data

In the chart above we can see LME-held aluminum stocks have oscillated just above 1 million metric tons for roughly a year and a half. LME worldwide stocks measured at roughly 1.1 million metric tons in early June. These levels are drastically lower than stocks held between 2009-2015.

Automotive Innovation Continues to Tighten Aluminum Supplies

The automotive pull on aluminum supplies will continue to impact aluminum prices over the longer term. This impact will continue to increase as more automotive companies innovate with the metal and push for lighter overall vehicle weight.

Novelis, the producer of aluminum automotive body sheet for the popular Toyota RAV4 and NIO ES6, recently announced its first aluminum sheet battery enclosure solution, which it calls “a more sustainable mobility solution in battery electric vehicles, a market that is expected to more than triple globally by 2025,” it said in a recent company statement.

An industry chief from Constellium Bowling Green, the company’s automotive unit, cites the automotive market as the biggest growth opportunity for the aluminum industry in years. The company expects demand for automotive aluminum to hit 1.4 million tons annually by 2025.

The company also features aluminum battery enclosures for vehicles and makes crash management systems, side impact beams, decorative trims and emblems in aluminum, according to the company’s website. According to the company balance sheet, revenue from sales of packaging rolled and automotive rolled products increased by 12% in Q1 2019 compared with Q1 2018.

Braidy Industries‘ Atlas Mill, the first greenfield aluminum rolling mill in the U.S. in 37 years, according to the company, will open around 2021. According to its company chief, the next five years will be the best in the past five decades. Russian aluminum giant Rusal plans to take ownership of 40% of the project, but the deal presently faces congressional scrutiny.

On the other hand, some automotive lines may never end up making the shift over to aluminum if presented with other options, given the costs of white body production line conversion.

Nippon Steel, of Japan, understands the business threat and opportunity, responding recently by developing a new lightweight car body of steel with a 30% weight reduction.

In Japan, benchmark aluminum premiums increased to $115-$120 mt for Q3. According to press reports, the 10-14% increase follow tighter supply.

Chinese Aluminum Prices

SHFE aluminum prices continued to maintain upward momentum overall so far this year.

Source: MetalMiner analysis of Fastmarkets

Constrained capacity growth could support prices.

On the other hand, some capacity expansion plans for primary ingot are being reported independently by region, according to press reports. This includes the Guangxi Zhuang Autonomous Region’s plan to boost production of aluminum to 4.8 million metric tons by 2025, from the present annual amount of around 2.25 million metric tons in 2018 and an estimated 2.6 million tons for 2019, according to its Ministry of Industry and Information Technology.

Shortage of scrap material also constrains China’s domestic production due to China’s tightening of its scrap import policy. 

U.S. Aluminum Premiums

The U.S. Midwest Premium finally dropped slightly but still rounded to $0.19/lb in early June.

The higher premium indicates supply shortfalls remain.

As indicated by a recent Reuters report, suppliers may be holding the premium higher to cover the 10% import costs on materials. With Canadian and Mexican tariffs now removed, we might expect some drop in the premium.

Source: MetalMiner data from MetalMiner IndX(™)

However, looking at the chart above, the premium already increased a great deal in the year prior to the implementation of the tariffs, with the premium then sticking at that higher level.

U.S. imports of aluminum totaled $24.3 billion dollars, a drastic increase of 41.7% since 2014. Import growth leveled off after 2017, with domestic production already largely shut down due to poor margins.

What This Means for Industrial Buyers

With industrial metal markets still down, including aluminum, on an uncertain economic outlook, and as the U.S. Midwest Premium remains high, buying organizations need to watch the market carefully.

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Actual Metal Prices and Trends

Chinese aluminum prices dropped in the 1.7% to 3% range. Chinese aluminum scrap dropped 1.7% to $1,868/mt, while the primary cash price dropped 3% to $2,042/mt. Billet and bar prices decreased by 2.5% to $2,113/mt and $2,210/mt, respectively.

European prices showed the largest decrease in the index, with commercial 1050 sheet prices down 4.6% to $2,497/mt, while 5083 plate dropped 4.4% to $2,953/mt.

India’s primary cash price dropped 3.7% to $2.07/kilogram.

Other price drops in the index registered at less than 2%, including the LME primary 3-month aluminum price hitting $1789/mt following last month’s larger drop of 5%.

According to the Financial Times, Norsk Hydro’s giant Alunorte refinery in Brazil has been given approval to restart production by the Brazilian authorities.

The announcement caught the market by surprise, coming some months earlier than had been expected.

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The restart is a boost for Hydro, whose Brazilian operations, which form bauxite for primary aluminum, have had a slow go of things for the last year. The firm has been forced to run its 6.3 million ton refinery at half its normal capacity following a 2018 dam tailings spillage.

The Financial Times reports production at Alunorte would hit 75-85% of its 6.3 million ton capacity within two months, adding some 2 million tons per annum to the market.

“Production at Hydro’s Paragominas bauxite mine will be increased in line with the ramp-up speed at Alunorte,” the company is quoted as saying. “A decision to increase production at Hydro’s part-owned Albras primary aluminium plant is also expected shortly.”

Alumina prices had been supported by Alunorte’s slowdown and further buoyed by environmental pressure on refineries in China. However, this month authorities ordered the closure of a major refinery in Shanxi province following spillage of red mud waste tailings.

But overall, China’s exports have been at a record high and new alumina refineries are coming on stream.

AluminiumInsider reports Emirates Global Aluminium’s Al Taweelah refinery will, at full capacity, produce 2 million tons per year, with output for 2019 expected to be around 0.7 million tons.

Other projects expected to restart or increase production in 2019 include: the Alpart Alumina refinery in Jamaica, India Vedanta’s Lanjigarh refinery and Friguia refinery in Guinea, the article notes.

Global alumina production (excluding China) is expected to increase by nearly 4 million tons this year compared to 2018, with further capacity coming on stream in 2020. All this new supply will undermine price support for spot alumina and, in turn, the primary aluminum price.

Many aluminum smelters caught between relatively high spot alumina prices and an already weak aluminum price have had their margins squeezed.

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To the extent that alumina prices ease this year, that pressure could ease — but so will support for the primary ingot price as smelters are allowed to adjust prices to the market.

If you ask 100 procurement professionals whether or not the Section 232 steel and aluminum tariffs have helped or harmed them, 100% will say the tariffs harmed them.

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After fielding hundreds of calls from metal-buying organizations this past year, we here at MetalMiner can definitely say that metal-buying organizations have felt “tariff pain.”

But at the same time — and there is a big but — many companies mitigated much, if not all, of that price risk by deploying effective sourcing strategies.

The recent press attention given to the alleged “harmful effects” of Section 232 tariffs on aluminum and steel on consumers and businesses appears to be ill-informed.

Before we dive into the details, let’s set the record straight on where steel and aluminum prices appear today, where they were when tariffs went into effect and where they were before tariffs.

Let’s start with hot-rolled coil (HRC):

Source: MetalMiner IndX(SM)

Wait a Second, Rewind…

Two points if you said “wow, it looks like steel prices reached similar highs in 2011.”

To be fair, tariffs did lift steel prices in 2018 to 10-year highs, but prices have declined steadily since last July (four months after tariffs went into effect).

Today’s price levels now appear within the same range in which they traded back in 2011-2015. It’s hard to see how the consumer faces a hefty bill for HRC prices due to tariffs now or for any prior extended length of time.

A similar price dynamic applies to cold-rolled coil (CRC), with a little twist:

Source: MetalMiner IndX(SM)

What’s the twist, you might ask?

Read more

ronniechua/Adobe Stock

President Donald Trump announced today the removal of the U.S.’s Section 232 tariffs on steel and aluminum with resect to NAFTA partners Canada and Mexico.

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The tariffs had remained in place since June 1, 2018, when temporary exemptions for Canada, Mexico and the E.U. were allowed to expire.

Trade officials from the three countries had expressed optimism earlier this week that a deal was near to remove the 25% steel tariff and 10% aluminum tariff.

The move marks a major step toward approval of the United States-Mexico-Canada Agreement (USMCA), meant as the successor to NAFTA.

“I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and we’ll be selling our products into those countries without the imposition of tariffs, or major tariffs,” Trump told the National Association of Realtors, as reported by USA Today. “Big difference.”

President Donald Trump, Canadian Prime Minister Justin Trudeau and then-Mexican President Enrique Peña Nieto signed the USMCA during the G20 Summit in Buenos Aires late last year. However the three countries’ legislatures must ratify the deal before it can go into effect.

As such, both Mexico and Canada in recent months have indicated that they would be unlikely to approve a deal without removal of the tariffs. Likewise, members of the U.S. Congress, both Republicans and Democrats, also indicated a deal would not be approved unless the tariffs are removed vis-a-vis imports of steel and aluminum from Canada and Mexico.

U.S. Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, lauded the move.

“Canada and Mexico are strong allies and have taken significant steps to assure that trade-distorting and subsidized steel and aluminum from third countries will not surge into the U.S. market,” Brady said.

“With this crucial issue resolved, now is the time for Congress to advance USMCA – delay means the United States continues to lose out on more jobs, more customers for Made-in-America goods, and a stronger economy.  Congress should take up this updated and modernized agreement, which will produce strong wins for America.”

David MacNaughton, Canada’s ambassador to the U.S., hailed the agreement to remove the tariffs.

“This is a victory for both our countries and our highly integrated steel and aluminum industries,” he said in a tweet Friday.

According to a joint statement issued by Canada and the United States, in addition to removal of the tariffs the countries will implement measures to “prevent the importation of aluminum and steel that is unfairly subsidized and/or sold at dumped prices” and “prevent the transshipment of aluminum and steel made outside of Canada or the United States to the other country.”

The joint statement also addresses situations in which imports levels surge.: “In the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country. After such consultations, the importing party may impose duties of 25 percent for steel and 10 percent for aluminum in respect to the individual product(s) where the surge took place (on the basis of the individual product categories set forth in the attached chart). If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector (i.e., aluminum and aluminum-containing products or steel).”

Canada will also rescind retaliatory tariffs on U.S. products imposed last summer. In addition to a variety of steel and aluminum products, the list of items targeted for retaliatory duties included coffee, yogurt and orange juice.

From the Analysts: Price Impacts of Removal of Section 232 Steel and Aluminum Tariffs for Canada and Mexico

With the removal of tariffs on imports of aluminum from Canada and Mexico, announced today by the U.S. government, MetalMiner anticipates the aluminum U.S. Midwest Premium may finally drop from the current level of around $0.19 per pound due to the easing of restrictions on the flow of prime material cross-border.

Source: MetalMiner data from MetalMiner IndX(™)

As of now, the LME aluminum price does not appear to show any impact from the news, with the price still sitting close to yesterday’s closing value.

Source: FastMarkets

Given the lack of major producers of semi-finished materials in both Mexico and Canada, MetalMiner does not anticipate a flood of materials to hit the U.S. market; therefore, buying organizations can continue to expect tightness for semi-finished aluminum commercial grade sheet and coil. Buying organizations will likely not see large price drops for semi-finished sheet and coil products.

On the other hand, given that the 25% tariff on steel effectively deterred imports of that metal to the U.S., MetalMiner does expect to see an impact on steel prices as imports of steel increase.

Canada serves as the largest exporter of flat rolled steel products, as well as long products, with Mexico taking the No. 3 position. For tubular products, Canada and Mexico take the No. 2 and 3 positions. For stainless steel, Mexico serves as the fourth-largest exporter to the U.S. and Canada does not export stainless to the U.S. in a major way.

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MetalMiner does not expect to see any major changes in domestic stainless steel prices, as most of the global suppliers of stainless steel still face the 25% Section 232 tariff.

While industrial metals started 2019 in an upward trend, the complex showed weakness as 2019 progressed.

In fact, all of the industrial metals hit down around current support levels — and lower at times — during the past few weeks.

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With industrial metals down across the board, are we moving into bear market territory? Or have we witnessed a temporary blip resulting from less certain macroeconomic conditions?

To examine the situation in more detail, let’s have a look at some of the key industrial metals and recent prices.

The DBB Trended Back Down to Mid-January 2019 Values

After a bullish start to the year, the DBB peaked on a short-term basis in early April, then trended back down once more.

Compared with July 2018’s larger drop, this one appears milder, but the short-term downward trend remains.

Source: MetalMiner analysis of NASDAQ.com data

The DBB tracks three key industrial metals: aluminum, copper and zinc. Let’s take a look at each metal to assess price performance using the LME 3-month futures price.

LME Aluminum

Looking at weekly trading volume, it looks like the downtrend in price is played out (based on recent positive trading volume). Also, both positive and negative weekly volumes looked weak recently, with a lack of momentum in prices.

Source: MetalMiner analysis of Fastmarkets.com

This indicates continued sideways movement on the LME aluminum price.

Given that the aluminum market moved largely sideways during the course of 2019, the Moving Average Convergence/Divergence (MACD) can also indicate where the market is at this time.

The MACD tracks the difference between two exponential smoothed moving averages (using the 12- and 26-day averages); it’s the black line in the graph below, which sits along the bottom edge below the price line. The red line, or signal line, uses the nine-day exponentially smoothed average of the MACD.

Source: MetalMiner analysis of Fastmarkets.com

When the values hold above zero, this indicates the market is overbought. When they are below zero, this indicates the market is oversold. If the lines continue to trend downward, then the downtrend is still in process.

By this indicator, the aluminum market looks oversold and a buy signal emerged recently when the longer-term line turned up after a couple of days of upward market momentum and edged past the signal line. The signal line followed a day later, indicating the downtrend lost steam.

Based on this analysis, aluminum prices may have already hit bottom and turned around; therefore, the aluminum market itself does not look bearish at present.

LME Copper

LME copper prices lately have showed clear weakness. However, they found support again recently in daily trading, stopping a further slide in price.

With negative trading volume still registering on a weekly basis, the price dynamic for copper still looks weak.

Source: MetalMiner analysis of Fastmarkets.com

Looking at volume on a weekly basis, we can see that it trended up again last week. Through the first few days of this week, volume registered as negative on the partial week’s data.

Copper prices still look weak.

LME Zinc

Like the other industrial metals, LME zinc prices trended downward in April.

Looking at weekly volumes for zinc, the price action looks mixed. (Note that the last bar shows only partial data for the week in progress.)

Source: MetalMiner analysis of Fastmarkets.com

Given the clearer trend when looking at LME zinc prices, we can use the 4-9-18 day moving average analysis to assess the state of the current downtrend. The result of the analysis shows the downtrend remains in process as the moving averages queue in the expected order, with the 18-day average on top (blue line), followed by the nine-day (purple line), then the four-day average (red line).

Source: MetalMiner analysis of Fastmarkets.com

Therefore, in the case of LME zinc (using this method) the downward trend continues. The red line, however, the shortest average and therefore most sensitive, has recently shown signs of turning back up.

Source: MetalMiner analysis of Fastmarkets.com

Looking at a MACD analysis, based on the 12-, 26-, and nine-day periods, the downtrend continues with the signal line in red sitting above the MACD line in black, while both continue in a downward trend below the zero point of the MACD indicator bar.

Readings below zero on the indicator show bullishness in the sense that prices may turn around. However, in this case the lines continue moving in a downward trend, so we may not have seen the bottom of zinc prices just yet.

What this Means for Industrial Buyers

During recent weeks, the main industrial metals tracked by MetalMiner showed weakness. Will this be temporary or are we looking at a more cyclical movement into bear market territory?

While aluminum prices look relatively stable, copper and zinc prices appear weaker, with no clear signal given that the downturn has passed.

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Therefore, while it’s too soon to call a bear market, it’s also too soon to say we’ve avoided one.

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A year on from the U.S.’s anti-dumping and countervailing duty orders on Chinese aluminum foil, imports of the product have plunged.

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The Aluminum Association Trade Enforcement Working Group filed a petition requesting relief from imports of Chinese aluminum foil in May 2017. Almost one year later, the U.S. Department of Commerce issued anti-dumping and countervailing duty orders on aluminum foil from China ranging from 55-176%.

Since then, according to an Aluminum Association white paper released Tuesday titled “Targeted Trade Enforcement in Action: Aluminum Foil AD/CVD One Year Later,” imports of Chinese aluminum foil have fallen significantly.

Imports of aluminum foil from China by volume fell 64% from 2017 to 2018, down from 272.4 million tons to 97.7 million tons. The white paper also notes imports of “unfairly traded aluminum foil” from China accounted for 60% of U.S. import market share in 2017, but just 20% in 2018.

Monthly U.S. imports of Chinese aluminum foil, 2010-2018. Source: Aluminum Association

The white paper also touts an increase in investment in the domestic aluminum industry.

“Companies like JW Aluminum and Granges worked for the past several years to reinvest in the U.S. foil industry,” the Aluminum Association white paper states. “These firms have announced substantial capital investments – with a combined value of approximately $169 million – to expand and strengthen facilities at which they manufacture aluminum foil.”

Aluminum Association President and CEO Heidi Brock lauded the trade action’s impact on the domestic aluminum industry.

“One year after taking strong action to enforce our nation’s trade laws, we are seeing clear and significant progress in the U.S. aluminum foil market,” Brock said. “We’d once again like to recognize the hard work of the administration, including the Commerce Department and the International Trade Commission, in helping aluminum foil producers in the U.S. to compete on a level-playing field.”

Brock also highlighted the action taken vis-a-vis aluminum foil compared with the Trump administration’s blanket tariffs on steel and aluminum imports via a Section 232 probe. In that case, the Aluminum Association has called for the tariffs on trading partners like Canada and Mexico to be removed and for the Trump administration’s trade enforcement focus to be squared on Chinese overcapacity.

“Not all tariffs are created equal,” Brock said. “Targeted trade enforcement as we’ve seen successfully deployed in the aluminum foil and, more recently, common alloy sheet, markets are the best way to make an impact. This approach allows us to effectively address issues in the marketplace while avoiding needless and disruptive tariffs on vital trading partners who play by the rules.”

The Section 232 tariffs on imported steel and aluminum — of 25% and 10%, respectively — remain in effect with respect to imports from Canada and Mexico. That fact remains a sticking point in the ongoing process to approve the pending United States-Mexico-Canada Agreement (USMCA), the intended successor to the 1994 North American Free Trade Agreement (NAFTA).

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The USMCA was signed by President Donald Trump, Canadian Prime Minister Justin Trudeau and then-Mexican President Enrique Peña Nieto during the G20 Summit in Buenos Aires late last year. However, the agreement must be ratified by each country’s legislature before it can go into effect.

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This morning in metals news, the Canadian government announced it is rolling out $100 million in funding for its domestic steel and aluminum industries, copper moves toward a seven-month high, and Vietnam’s steel exports to the U.S. increased in 2018.

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Canadian Steel, Aluminum Get a Boost

The Canadian government has announced it will offer $100 million in funding to small- and medium-sized aluminum and steel firms in the country, the CBC reported.

The U.S.’s Section 232 tariffs on steel and aluminum remain in place for NAFTA partners Canada and Mexico. Those tariffs are the primary point of contention as the successor to NAFTA — the United States-Mexico-Canada Agreement (USMCA) — still needs to be ratified by the three countries’ legislatures.

Copper Continues Hot Streak

The copper price moved toward a seven-month high on Tuesday, Reuters reported.

LME copper jumped 1% to $6,472.50 per ton, according to the report.

Vietnam Steel Sector Grows

Despite the U.S.’s aforementioned Section 232 tariffs, one southeast Asian country saw its steel exports to the U.S. rise last year.

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According to an S&P Global Platts report, Vietnam’s finished steel exports to the U.S. surged 48% in 2018 compared to 2017.