The price of aluminum futures in London has rebounded more than 80% from April 2020. On the one hand, demand is released as the economy is unblocked. On the other hand, the disruption of the global supply chain has exacerbated shortages in some regions, thereby further pushing up prices.
Under the dual stimulus of demand recovery and supply chain disruption, global aluminum prices continue to rise.
The price of aluminum futures in London has climbed by one-third this year, reaching approximately US$2,650/ton, a new high since 2011. With the gradual recovery of the global economy from the impact of the epidemic, the price of aluminum futures in London has rebounded more than 80% from April 2020.
From beverage cans to airplanes and constructions, aluminum is widely used in various fields of life and production. Before the outbreak of the epidemic, the global aluminum market was in a dilemma of oversupply, and aluminum prices have entered a downward trend since their peak in 2018.
However, the sudden epidemic disrupted the supply and demand situation in the market. On the one hand, demand was released as the economy was unblocked. On the other hand, the disruption of the global supply chain exacerbated shortages in some regions, thereby further pushing up prices.
As the global aluminum demand center shifts from Europe and the United States to Asia, the London Metal Exchange has moved aluminum stocks from Rotterdam, the Netherlands, and other places to warehouses in Malaysia, which is closer to the Asian market. However, since the beginning of this year, the global logistics supply chain has been affected by factors such as port congestion and container shortages, making it difficult for aluminum stocks in Asia to reach Western markets such as Europe and the United States.
According to the Wall Street Journal, ports such as Los Angeles and Long Beach in the United States are crowded with a large number of orders from various companies that are busy replenishing inventory and preparing for the holiday shopping frenzy. The supply of containers used to transport industrial metals is insufficient, and traders are passing on soaring freight costs to customers.
In addition to the cost of aluminum prices, buyers also have to pay additional costs for freight, customs, and other expenses. According to Intercontinental Exchange data, buyers in the Midwest region of the United States recently paid an additional cost of US$761 per ton, the highest level since 2012.
In addition, in order to ease the pressure on domestic prices, Russia began to impose tariffs on exports of aluminum and other metals in August. From August 1 to December 31, Russia’s aluminum production will be levied 15% export tariffs, plus 254 per ton of aluminum. Dollar.
According to reports, Russia is the world’s second largest producer of primary aluminum (6%) and the world’s largest exporter of aluminum ingots (17%). The imposition of aluminum export tariffs will have a greater impact on the global primary aluminum supply pattern and further push it up. The cost of the demand side.
According to Yao Wenyu, a strategist at ING Groep, a large amount of aluminum is still locked in financing agreements reached by investors, banks and trading companies last year, which further restricts available supply. These transactions include buying aluminum, storing it, and selling metal forward contracts.
Shanghai aluminum futures hit a new high in nearly 13 years
As international aluminum prices fluctuated and strengthened, Shanghai aluminum futures also recently hit a new high in the past 13 years.
The CITIC Securities Research Report pointed out that in the context of the National Development and Reform Commission’s policies pushing up costs, the scale and sustainability of supply disturbances are beyond expectations, consumption is expected to improve marginally during peak seasons, and global liquidity easing is expected to prolong, it is expected that the high continuity of aluminum prices will be stronger than The market expects and is expected to continue to rise.
In order to do a good job in ensuring supply and price stabilization in the electrolytic aluminum industry, and to prevent malicious speculation and irrational rise in aluminum prices, the China Nonferrous Metals Industry Association held a video conference for backbone electrolytic aluminum enterprises on the afternoon of August 30, 2021.
Ten electrolytic aluminum companies including China Aluminum Group, Weiqiao Venture, State Power Investment, Shandong Xinfa, Oriental Hope, Jiu Steel Group, Henan Shenhuo, Tianshan Aluminum, Hangzhou Jinjiang, and Yidian Group participated in the meeting. The electrolytic aluminum production capacity of participating companies The total is more than 30 million tons, accounting for more than 70% of the total production capacity of electrolytic aluminum in the country.
The meeting reached the following three points of consensus:
The first is to resolutely implement the requirements of the Politburo meeting of the CPC Central Committee on July 30, do a good job in ensuring the supply of bulk commodities and stabilizing prices, and prevent malicious speculation and irrational rises in aluminum prices.
Second, the third quarter has entered the traditional off-season for consumption. Demand in key areas such as construction, transportation, and electricity has generally stabilized, and there has been no obvious shortage of market supply and demand. Enterprises will continue to ensure supply and stabilize market expectations.
Third, although production factors and environmental protection costs have increased, companies will strive to cope with rising costs through measures such as improving resource and energy utilization and strengthening production management efficiency.
In addition, the National Material Reserve Regulation Center announced on August 27 that it plans to release the third batch of 2021 national reserve aluminum on September 1, with a total of 70,000 tons.
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