LME aluminum

Engineers and materials scientists at the Fraunhofer Institute for Machine Tools and Forming Technology recently revealed a new aluminum foam for train cabs, a material that’s stronger, lighter, and better in a crash than fiberglass or regular old metal.

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Engineers in Chemitz, Germany unveiled a prototype high-speed train cab made with the stuff earlier this year, Wired reported. The composite material is built like a sandwich: Between two pieces of aluminum, each just two millimeters thick, is a 25-millimeter-thick layer of the “foam,” actually a low-density, sponge-like composite of magnesium, silicon, and copper, and aluminum. And like a good sandwich, there’s no glue. The layers are held together by metallic bonding, the electrostatic attraction of negatively charged electrons and positively charged ions.

The result is a material that’s 20 percent lighter than traditional fiberglass, which is commonly used on high-speed train cabs. That’s a big advantage when the goal is to move faster and more efficiently. Even better, it doesn’t come at the cost of a weaker train.

The price of Chinese aluminum billet rose 1.8% on Wednesday, December 10, making it the day’s biggest mover. After two days of falling prices, it closed at CNY 13,600 ($2,198) per metric ton. The cash price of Chinese aluminum declined 0.5% to CNY 13,290 ($2,148) per metric ton. At CNY 14,280 ($2,308) per metric ton, Chinese aluminum bar fell 0.5% on Wednesday. Chinese aluminum scrap held its value on Wednesday at CNY 12,800 ($2,069) per metric ton.

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The cash price of primary aluminum saw a 0.8% decline on the LME to $1,945 per metric ton. The aluminum 3-month price weakened by 0.7% on the LME, settling at $1,959 per metric ton. The cash price of primary Indian aluminum rose 0.3% to INR 122.10 ($1.97) per kilogram.

Aluminum is exiting warehouses tracked by the London Metal Exchange at the fastest pace in a decade, leaving investors with less information about the market and possibly more volatility.

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Banks and traders are moving metal to cheaper facilities outside the LME network, a tactic to save money as profits from one of the most common trading strategies shrinks, analysts at Jefferies Group LLC and INTL FCStone Inc. told Bloomberg News.

About two-thirds of the metal exiting LME depots this year ended up in warehouses not monitored by an exchange, Macquarie Group Ltd. estimates.

Storing aluminum to make money from the spread between short- and long-term contracts has limited supplies for consumers, helping boost premiums to obtain the metal to a record high, according to Macquarie.

On Tuesday, December 9, the day’s biggest mover was the aluminum cash price, which saw a 2.1% decline on the LME to $1,960 per metric ton. The cash price of primary Indian aluminum fell 1.2% to INR 121.75 ($1.97) per kilogram. The 3-month price of aluminum closed at $1,973 per metric ton. Following a couple days of improvement, prices fell by 1.2% on the LME.

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Chinese aluminum prices were mixed for the day. The price of Chinese aluminum scrap increased 1.6% to CNY 12,800 ($2,073) per metric ton. Chinese aluminum billet saw its price drop 0.1% to a 30-day low of CNY 13,360 ($2,164) per metric ton yesterday. The Chinese aluminum cash price weakened by 0.1%, settling at CNY 13,360 ($2,164) per metric ton. The price of Chinese aluminum bar fell 0.1% to CNY 14,350 ($2,324) per metric ton.

With the release of the “Micromill” aluminum process, Alcoa continues to be the dominant innovation force in the automotive aluminum industry.

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Alcoa’s  finishing technology laid the foundation for the automotive aluminum revolution, and now the Micromill will open new fronts where aluminum will replace high strength steel on next-generation automotive models, a Barron’s analysis said. However, given premium pricing and niche applications, the Micromill will likely expand new markets for aluminum rather than disrupt current body-in-white (BiW) capacity plans.

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On Monday, December 8, the day’s biggest mover was the price of Chinese aluminum billet, which saw a 2.3% decline to CNY 13,380 ($2,176) per metric ton. Chinese aluminum scrap prices saw a 0.8% decline to CNY 12,600 ($2,049) per metric ton. The Chinese aluminum cash price declined 0.6% to CNY 13,380 ($2,176) per metric ton. Chinese aluminum bar ended the day at CNY 14,370 ($2,337) per metric ton, after the 0.6% drop yesterday.

On the LME, the primary aluminum cash price rose 1.4% to $2,002 per metric ton. At $1,996, the 3-month price of aluminum finished the market day on the LME up 1.1% per metric ton. The Indian aluminum cash price saw little movement yesterday, closing out around INR 123.25 ($1.99) per kilogram.

The monthly Aluminum MMI® registered a value of 94 in December, a decrease of 1.1% from 95 in November.

*Note: Effective 12/1/14, MetalMiner updated some of the source data from China used to calculate this index. Therefore the December index reading appears a little more volatile when compared to the November reading. Any movements in the January reading will once again reflect only market price changes as opposed to market and source data prices changes.

Aluminum_Chart_December-2014_FNL

Aluminum keeps fighting the general market as it tries to hold its gains for the year while commodities, overall, are falling sharply. In November, the entire commodity complex fell as crude oil slumped and the dollar continued to rise. Although crude is not the primary source of energy in producing  aluminum, energy accounts for 30% of its total cost and lower oil prices can have a deflationary effect.

Compare with November’s Aluminum market report!

In spite of all these bearish developments, aluminum is doing okay, finishing the year with a 13% gain. The fundamentals for aluminum are stronger than other metals (such as copper) as aluminum keeps gaining market share from copper and galvanized steel.

Read more

Daily average aluminum production in the world outside China slid to 66,200 tons in October, according to the International Aluminum Institute (IAI).

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It was the lowest collective run-rate since January with continued strong growth in the Gulf region, up 23% so far this year, offset by curtailments and closures elsewhere.

Annualized non-Chinese production has fallen by 1.61 million tons since the start of 2012, which was when Western producers started wielding the collective axe in response to low prices.

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At CNY 12,700 ($2,064) per metric ton, Chinese aluminum scrap moved up 0.8% on Friday, December 5, the day’s biggest change. The Chinese aluminum cash price remained essentially flat at CNY 13,460 ($2,187) per metric ton. Chinese aluminum bar saw little change in its price last Friday at CNY 14,450 ($2,348) per metric ton. The price of Chinese aluminum billet held steady at CNY 13,700 ($2,226) per metric ton.

Following a two-day drop, the primary aluminum cash price increased by 0.4% on the LME to $1,975 per metric ton. On the LME, the aluminum 3-month price gained 0.4% to finish at $1,974 per metric ton. The Indian aluminum cash price saw a 0.2% decline to INR 123.35 ($2.00) per kilogram.

It won’t come as a surprise to aluminum consumers that the LME Aluminum contract has returned to backwardation, that is cash or prompt metal is at a premium to the 3 months price.

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The LME cash price has been flirting with backwardation for the last 2 months, sometimes at a discount, sometimes at the more usual premium. So news this week from Thomson Reuters that one firm had bulked up its positions to control more than 50% of the available aluminum on the London Metal Exchange last week served to ratchet up the tension in a market that has been gradually tightening all year.

According to the article, data released yesterday referring to Monday’s positions showed that a single participant was holding 50-80% of available aluminum stocks on the LME. As a result, the cost of rolling a short cash position for delivery tomorrow or the next day has soared above $7 per contract for the 4 trading days since a dominant warrant holder appeared on Nov. 26. Short holders were said to have been caught on the wrong side of the squeeze and raced to cover their positions, pushing up premiums.

The situation is not likely to ease, against a backdrop of year’s end when markets become quieter, positions are squared away and liquidity reduces the ability of a dominant holder to manipulate the market improves. Technically, LME rules limit the profit a party can make by hoarding so much supply on any day that traders with short positions are unable to cover them at the close.

As the article points out, any party holding a position worth over half of LME available stocks must supply metal to short-position holders at very modest price premiums. But this player is not doing this for fun. Physical metal has been getting tighter this year as industrial demand has picked up and smelter cutbacks have reduced supply.

As Reuters points out, US auto sales hit an annualized rate of about 17.1 million units in November, the best pace for that month since 2003 and not only are the number of cars up but the amount of aluminum per car has risen steadily. Indeed, automotive is the fastest growing consumer of aluminum and is set to continue that trend for the rest of the decade.

Not surprisingly, physical delivery premiums currently being negotiated for the 1st quarter of 2015 are expected to be some $10-20 per ton higher than current Q4 2014 levels. Asia is paying in the region of $420 per metric ton, but while billet suppliers were adjusting premiums monthly around the middle of this year, they have set fixed premiums for the first quarter of next year holding out the hope that some stability may be on the way. A convergence of the LME price to the delivered-market-price would be a welcome development for consumers next year, an objective the current shenanigans going on at the LME are not going to help one iota.

 

Aluminum returned to backwardation this week a one investor held 50 to 80% of available aluminum contracts on the London Metal Exchange.

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The LME cash price has been flirting with backwardation for the last 2 months, sometimes at a discount, sometimes at the more usual premium. So this news ratcheted up market tension.

The week’s biggest mover on the weekly Aluminum MMI® was the aluminum cash price, which saw a 6.3% decline on the LME to $1,966 per metric ton. This comes on the heels of a 3.7% increase the week before. Following a 2.5% increase in the week prior, the 3-month price of aluminum fell 4.8% on the LME last week to $1,966 per metric ton. The Indian aluminum cash price fell 3.6% to INR 123.55 ($2.00) per kilogram after rising 1.9% the week before.

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Chinese aluminum prices were mixed for the week. The price of Chinese aluminum scrap rose 5.9% to CNY 12,600 ($2,049) per metric ton after falling 8.1% during the previous week. Chinese aluminum billet fell 2.1% over the past week to CNY 13,700 ($2,228) per metric ton. Following a 0.4% increase in the week prior, the cash price of Chinese aluminum fell 2.0% last week to CNY 13,450 ($2,187) per metric ton.

Prices for Korean 3003 coil premium over 1050 sheet remained constant, closing the week at KRW 3,740 ($3.39) per kilogram. Korean 5052 coil premium over 1050 sheet traded sideways last week, hovering around KRW 3,890 ($3.52) per kilogram. At EUR 2,954 ($3,694) per metric ton, the price of European 5083 plate did not change since the previous week. European 1050 aluminum remained essentially flat from the previous week at EUR 2,613 ($3,268) per metric ton.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Alcoa on Thursday announced what it described as a revolutionary breakthrough in its campaign to replace steel in cars with aluminum, unveiling a process that in minutes converts molten aluminum into sheet metal that is lighter and stronger and has wider applications than existing aluminum.

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The company said it has conducted successful customer trials with metals produced from the process, which it is calling Micromill. The tests were done at a pilot plant in San Antonio. Alcoa told the Pittsburgh Post-Gazette it is qualifying the material for use in the next generation of automotive designs.

“It will allow our customers to redefine the boundaries of vehicle design, supporting the creation of lighter, more fuel-efficient, safer and more stylish vehicles,” Alcoa chairman and CEO Klaus Kleinfeld said in a prepared statement.

Micromill aluminum is 30% stronger and 40% easier to bend into intricate forms than aluminum sheet currently provided to the automotive market, the company said. Alcoa said the new product is 30% lighter than comparable parts made with high-strength steels.

The improved ability to form the new aluminum makes it possible to use it in the inside panels of doors, external fenders and other car parts that aluminum previously could not be used for, Alcoa said.

Micromill can be made at a plant that is one-quarter the size of a traditional mill using 50% less energy, the company said. The process reduces the time it takes to convert molten metal into aluminum sheet from 20 days to 20 minutes, Alcoa said.

The aluminum cash price saw the biggest decline of the day, dropping 2.4% on the LME to close at $1,966 per metric ton on Thursday, December 4. On the LME, the aluminum 3-month price fell 1.8% to $1,966 per metric ton. After a 0.5% increase, the Indian aluminum cash price finished the day at INR 123.55 ($2.00) per kilogram.

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Chinese aluminum prices were mixed for the day. The Chinese aluminum cash price rose 0.7% to CNY 13,450 ($2,187) per metric ton. Chinese aluminum bar gained 0.7% to finish at CNY 14,440 ($2,348) per metric ton. Chinese aluminum scrap stayed flat at around CNY 12,600 ($2,049) per metric ton. The price of Chinese aluminum billet held steady at CNY 13,700 ($2,228) per metric ton.

The aluminum market is showing signs of severe stress as one investor has scooped up the majority of available cash metal, roiling prices and stoking supply concerns amid a revival in demand from the automotive and construction sectors.

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Traders wanting to roll over contracts must pay London Metal Exchange prices that are close to two-year peaks and the cost could spike further as record premiums, the charge to obtain physical metal, encourage traders to hoard.

The cost of rolling a short cash position for delivery tomorrow or the next day has soared above $7 per contract for the four trading days since a dominant warrant holder appeared on Nov. 26 as short holders raced to cover their positions. On Monday, it was as high as $10, its loftiest since December 2012.The spread between spot and three-month prices has swung in and out of backwardation in recent months, meaning cash is more expensive than later-dated contracts, Reuters reported.

On Wednesday, December 3, the cash price of primary Indian aluminum fell by 2.4%, landing at INR 122.90 ($1.99) per kilogram and making it the day’s biggest mover. The primary aluminum cash price weakened by 0.3% on the LME, settling at $2,015 per metric ton. Following a two-day drop, the aluminum 3-month price increased by 0.2% on the LME to $2,002 per metric ton.

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Prices of Chinese aluminum were down across the board yesterday. Following a quiet couple of days, the price of Chinese aluminum billet fell 1.4% yesterday to CNY 13,700 ($2,229) per metric ton. The Chinese aluminum cash price fell 1.3% to CNY 13,350 ($2,172) per metric ton. Chinese aluminum bar closed 1.2% lower at CNY 14,340 ($2,333) per metric ton. Chinese aluminum scrap prices saw a 0.8% decline to CNY 12,600 ($2,050) per metric ton.

United Company Rusal Plc‘s billionaire company founder Oleg Deripaska will take on a new role as president of the Russian aluminium giant, with his right hand man promoted to the job of chief executive, the Kiev Post reported.

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Vladislav Soloviev, previously First Deputy CEO, recently became CEO.

Closing at CNY 14,510 ($2,358) per metric ton on the Tuesday, December 2, Chinese aluminum bar rose 7.3% to finish as the day’s biggest mover. After a couple of days of decreasing prices, the cash price of Chinese aluminum held steady at CNY 13,520 ($2,197). The price of Chinese aluminum billet remained essentially flat at CNY 13,900 ($2,258) per metric ton. The price of Chinese aluminum scrap remained steady at CNY 12,700 ($2,063) per metric ton.

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The primary aluminum cash price continues its trend downwards. Finishing the day at $2,021 per metric ton, it dropped 2.4% on the LME. The 3-month price of aluminum weakened by 1.4% on the LME, settling at $1,998 per metric ton. Following a two-day drop, the cash price of primary Indian aluminum increased by 0.2% to INR 125.95 ($2.03) per kilogram.

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