aluminum price

The Construction Monthly Metals Index (MMI) picked up by 4.9% for this month’s reading.

September 2021 Construction MMI chart

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US construction spending

U.S. construction spending reached a seasonally adjusted annual rate of $1,568.8 billion in July, the Census Bureau reported earlier this month.

The July rate marked a 0.3% increase from the previous month. Furthermore, the July figure jumped by 9.0% compared with July 2020.

During the first seven months of the year, construction spending totaled $883.2 billion, up 6.2% year over year.

Private construction spending reached a rate of $1,231.0 billion, or up 0.3%. Within private construction, residential construction reached an annual rate of $773.0 billion in July, up 0.5% from June. Nonresidential construction came in at $458.0 billion in July, or down 0.2%.

Meanwhile, public construction reached $337.8 billion, up 0.7%. Educational construction checked in at $79.7 billion, down 0.5%. Highway construction rose by 1.9% to a rate of $94.5 billion.

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An aluminum market that has lived with Chinese oversupply for two decades is experiencing a very different year in 2021.

According to Reuters, it is starting to price in a very different future.

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Aluminum prices of the future

aluminum ingot

WestPic/Adobe Stock

The world needs more aluminum to go green. However, the smelters that produce the stuff use huge amounts of power. Those smelter account for around 2% of all manmade emissions each year, much of which is due to Asia’s overwhelming reliance on coal as a power source.

Squaring the circle between aluminum’s huge power demands and efforts to meet emissions commitments is proving very challenging for China’s aluminum industry. The post reports IAI estimates that the world will need another 25 million tons of primary metal production to meet an expected 80% rise in demand by 2050, fueled in large part by the drive to decarbonize.

Yet, even that daunting target assumes a 100% recycling rate. Even with the best of intentions, that is unlikely to happen.

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The Aluminum Monthly Metals Index (MMI) increased by 4.1% for this month’s reading.

September 2021 Aluminum MMI chart

Do you know the five best practices of sourcing metals, including aluminum?

LME three-month aluminum prices are only $100/mt away from 2011 prices.

Overall, LME aluminum traded up despite some volatility in August.

Prices took their largest dip Aug. 16-19 before recovering. During the same period, LME trading volumes got heavier, marking a negative trend.

However, volumes got even heavier as the price increased. This ultimately signals that the market remains bullish.

Chinese prices also climbed this month. SHFE volumes — along with prices — picked up heavily toward the end of the month, consistent with a strong bullish trend.

Beijing wary of rising aluminum prices

Rising aluminum prices have become a concern for China.

Bloomberg reported that the China Nonferrous Metals Association believes the steep increase of the aluminum price is not supported by fundamentals and substitutions could emerge.

Record high prices have already deterred the manufacturing sector in China.

China’s Caixin Index has dropped since June. In August, the index dropped below the 50 level, meaning factory activity is contracting.

On Sept. 1, China released its third batch of metals from state reserves. The move is an attempt to control prices and prevent commodities inflation from hurting economic growth. However, the release did not dent prices.

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This morning in metals news: Norsk Hydro announced it is extending its partnership with Equinor and Panasonic; meanwhile, North American Stainless earlier this month issued a flat product price announcement; and, lastly, aluminum prices remain elevated.

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Norsk Hydro extends battery partnership

Norsk Hydro

filins/Adobe Stock

Oslo-based aluminum maker Norsk Hydro yesterday announced it is extending its partnership with Panasonic and Equinor to create a joint European battery business.

“The strategic partnership will continue to develop the business case for a sustainable and cost-competitive European battery business,” Norsk Hydro said in a release.

“The joint battery initiative has refined possible Norwegian site locations for a potential European battery business to a handful. At the same time, the project will be looking at alternative locations in the European Union.”

NAS issues price announcement

Earlier this month, North American Stainless announced several price changes for its products.

The price changes included:

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Global aluminum production totaled 5.75 million tons in July, the International Aluminum Institute (IAI) reported this month.

The monthly total marked an increase from 5.57 million tons in June.

Are you prepared for your annual aluminum contract negotiations? Be sure to check out our five best practices

China aluminum production rises in July

aluminum ingot stacked for export

Olegs/Adobe Stock

China, the world’s top aluminum producer, produced an estimated 3.34 million tons in July. The July total marked an increase from 3.24 million tons in June.

The July total also jumped from the 3.12 million tons produced in July 2020.

In July, China imported 469,030.6 tons of unwrought aluminum and aluminum products, the General Administration of Customs reported. The total increased from 454,397.4 tons in June.

Meanwhile, China exported 3.09 million tons through July, good for an increase of 12.7% year over year. Furthermore, on a value basis, China’s aluminum imports for the aforementioned period increased by 37.1% year over year, reflecting a generally bullish price environment for the base metal this year.

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This morning in metals news: the Energy Information Administration forecast U.S. natural gas exports will exceed imports this year; aluminum prices remained near 10-year highs last week; and, finally, the Associated General Contractors of America reported on the rise in construction input costs.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US natural gas exports to exceed imports

natural gas tap

PhotocreoBednarek/Adobe Stock

U.S. natural gas exports are set to exceed imports this year, the Energy Information Administration (EIA) reported.

The EIA forecast exports will exceed imports by 11.0 billion cubic feet per day, or 50% more than the 2020 average.

“Increases in liquefied natural gas (LNG) exports and in pipeline exports to Mexico are driving this growth in U.S. natural gas exports,” the EIA added. “For the first time since U.S. LNG exports from the Lower 48 states began in 2016, annual LNG exports are expected to outpace pipeline exports—by an estimated 0.6 Bcf/d—this year.”

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natural gas

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Before we head into the weekend, let’s take a look back at the news that was and some of the metals storylines here on MetalMiner: Soaring natural gas prices and inflation; China’s aims to further reduce steel output; Aluminum prices near a decade high, according to our Monthly Metals Index coverage. Look for the Copper MMI and more next week.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.  Read more

The Aluminum Monthly Metals Index (MMI) increased by 7.0%. Prices remain historically high, with Chinese prices increasing the most this month.

Throughout July, LME aluminum traded mostly sideways until the last few days of the month when the price spiked. LME prices reached $2,619/mt on Aug. 1. Prices are close to the decade high of March 2011, when prices went over $2,700/mt. While prices remain high, trading volumes on the LME were lighter than the previous month with the exception of the last day of month when prices and volume peaked. Volumes declined since, signaling that the uptrend looks weak.

Chinese prices differ from the LME, trading consistently higher throughout July. Trading volumes were light though and only spiked on the last day of the month, signaling a similar trend to LME prices.

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Aluminum prices get U.S. Senate attention

The aluminum Midwest Premium price hit a record high of $0.32/lb at the end of July. The Midwest premium increase is driven by a rundown in Western warehouses and off-warrant inventory to locations convenient for onward shipment to China, which remains a net importer of unwrought aluminum since Q2 of 2020. Another driver was the 15% Russian export tax on aluminum, as Russia is the second-largest exporter of primary aluminum to the U.S.

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A recent post from the Russian news agency Interfax paints a predictably conciliatory line on the impact of Russia’s export tariffs on RUSAL.

aluminum ingot

WestPic/Adobe Stock

The post faithfully reports RUSAL’S complaints that the introduction of export duties will make some of the group’s export supplies unprofitable. It add that it may force the company to mothball a number of lower-margin assets, quoting Roman Andryushin, the company’s deputy general director of sales.

Are you ready for your annual aluminum contract negotiations? Be sure to check out our five best practices

RUSAL and Russia’s export tax

According to Andryushin, RUSAL produces about 4 million tons of primary aluminum and alloys a year. Of that total, it exports 2.8 million tons. He added that the imposition of a 15% export tax will result in losses running into hundreds of millions of dollars.

As a result, RUSAL is suggesting the impact will be a slowdown in capital expenditure to modernize its Siberian plants. Furthermore, it says it will lead to the delay in the launch of the Taishet aluminum smelter, the first stage of which was due to start deliveries this year.

Whether the impact of the export tariff on RUSAL’s profitability will be quite as dire as the company suggests is debatable.

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As if aluminum buyers didn’t have enough to contend with, including long mill lead times and rising conversion premiums, they are also dealing with a rising Midwest premium.

Furthermore, Russia’s move to impose a 15% export tax on unwrought aluminum has had a profound impact on the Midwest delivery premium.

Are you ready for your annual aluminum contract negotiations? Be sure to check out our five best practices.

Midwest premium continues to soar

aluminum ingot stacked for export

Olegs/Adobe Stock

A recent Reuters article reports that the CME Midwest premium has jumped to a record high of $660 per ton ($0.30/lb). As a result, product manufacturers and their end users are facing an all-in price for unwrought raw material in excess of $3,000 per metric ton, even before conversion to product premiums are added in.

But the post goes on to explain that Russia’s export tax is not the sole reason for seriously elevated physical delivery premiums.

Over the last few years, the shift in exchange and off-market global inventory has been from North American and European markets toward Asia.

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