U.S. Aluminum Premium Falls For Second Straight Month
MetalMiner | Sep 11, 2018 05:08AM ET
The September Aluminum Monthly Metals Index (MMI) traded sideways this month. The Aluminum MMI index stands at 95 points.
LME aluminum prices increased in August. However, so far in September, prices have fallen. Aluminum prices are in a sideways trend within the $1970-$2170/mt band.
Source: MetalMiner analysis of FastMarkets
Buying organizations may want to remember that the $1,970/mt level has served as a strong support level (or floor) since August 2017.
During 2017 and 2018, aluminum prices fell two times toward that support level and rebounded from it. Aluminum prices decreased in December and April.
Therefore, buying organizations may want to follow closely how aluminum prices react to that level.
h2 Global Aluminum/h2Mexico launched an anti-dumping probe against Chinese aluminum foil makers after reaching a new NAFTA deal with the U.S. Mexico and the U.S. reached a new NAFTA agreement on Aug. 27. The U.S. and Mexico agreed to increase regional automotive content to 75% from the current 62.5% in NAFTA. The deal will be reviewed after six years. As stated by the USTR, duty-free access for agricultural products remains in place.
Meanwhile, Japanese aluminum premium offers have fallen by around 13-15% from last quarter. Current pricing indicates Japanese aluminum premiums of between $112-$115/mt. Premiums represent the regional logistical costs of moving metal from the producer to the regional exchange. (it is a cost borne by the consumer). Japan is Asia’s biggest aluminum importer.
h2 SHFE Aluminum/h2Chinese SHFE aluminum prices increased in August, following the LME aluminum trend.
So far in September, prices have retraced slightly. As with LME prices, the SHFE long-term trend has become a mostly sideways trend.
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Source: MetalMiner analysis of FastMarkets
h2 U.S. Domestic Aluminum/h2As a result of the ongoing uncertainty in the aluminum market, U.S. Midwest aluminum premiums have skyrocketed this year.
However, the U.S. Midwest premium has fallen for the second consecutive month. The premium currently stands at $0.19/pound.
Source: MetalMiner data from MetalMiner IndX(™)
h2 What This Means for Industrial Buyers/h2Despite the recent downtrend, the LME aluminum price trend suggests a continuation of the bull market that started last year.
Tariffs, sanctions and supply concerns will act as supports to aluminum prices, both for LME aluminum and the U.S. Midwest premium. Adapting the right buying strategy becomes crucial to reducing risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.
Click here for more information from our Monthly Metal Buying Outlook on how to mitigate price risk year-round.
h2 Actual Aluminum Prices and Trends/h2LME aluminum prices increased this past month, with a closing price in August of $2,118/mt.
Meanwhile, Korean Commercial 1050 sheet fell by 3.6%, following last month’s downtrend.
Chinese aluminum primary cash prices increased by 1.12%, while Chinese aluminum bar increased by 5.03%. Chinese aluminum billet prices also decreased 5.26% this month, falling to $2,313/mt.
The Indian primary cash price fell by 0.48% to $2.06/kilogram.
by Irene Martinez Canorea
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