Aluminum Market Update - Russian Supply Dominates LME Warehouses, July Price Recovery

Aluminum prices experienced a downward trend in June but stabilized in early July, displaying short-term relief patterns. 

Positive market sentiment was driven by cooling inflation data and a weakening U.S. dollar. However, the aluminum market remains uncertain, with the potential for either a continuation or reversal of the downtrend. In July, the Aluminum Monthly Metals Index (MMI) slightly declined by 1.79%.

Russian Aluminum Takes Over LME Warehouses:

Russian-origin aluminum now constitutes more than 80% of inventories in LME warehouses. Although the increase in Russian stocks has become repetitive due to government and self-imposed sanctions, it continues to impact the global aluminum benchmark. 

Concerns arise from the potential impact on aluminum prices as buyers compete for limited supplies from other sources. Despite the risk, the LME continues to accept Russian-origin material, citing ongoing demand from several countries as a regulatory factor for prices. 

Currently, LME prices maintain a premium of approximately $55/mt over CME prices, while the Midwest aluminum premium, an indicator of domestic demand, remains bearish.

Aluminum Buying Strategy Based on Price Trends:

If your company operates in the aluminum market, it is essential to have a well-defined aluminum buying strategy that takes into account current price trends. 

Monitoring market conditions, such as the dominance of Russian aluminum and its impact on prices, can help inform purchasing decisions and mitigate potential risks.

U.S. Lifts Tariffs on Indian Aluminum:

In a surprising move, the U.S. has lifted most of its tariffs on Indian steel and aluminum imports. The agreement includes an 80% approval rate for aluminum applications for projects in India. 

This development is significant as Indian supply acts as a counterbalance to the increasing presence of Russian material in LME inventories. 

While Russian and Eastern European production levels decreased by 1.62% YoY in H1, Asian production levels, including India (excluding China), increased by 1.27% during the same period. 

The removal of U.S. tariffs is expected to support India’s aluminum sector.

Notable Aluminum Price Movements:

Among the notable price movements in July, Korean commercial 1050 aluminum sheet prices increased by 4.6% to $4.03 per kilogram. 

The Korean coil premiums for 3003 and 5052 over 1050 also saw significant increases of 4.58% and 4.51%, respectively. In contrast, European commercial 1050 sheet prices fell by 2.94% to $3,830 per metric ton. 

LME primary three-month aluminum prices experienced a decline of 3.28% to $2,152 per metric ton.

For comprehensive monthly price trends and insights into various metals, including copper, stainless steel, aluminum, and precious metals, MetalMiner offers a free monthly MMI report. Sign up here to stay informed.

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Greetings! I'm Tejas Solanki, the mind behind this blog. Passionate about Blog writing, I strive to provide concise yet insightful content. Join me in exploring and cultivating knowledge in this space.

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