Steel Products Prices North America

CRU Aluminum: Macroeconomics Dampen Market Spirits

Written by Stephen Williamson

The LME aluminium three-month price eased lower again last week and was seen trading Friday at around $2,300 per tonne. Still below the high mark for 2023, recent news from the macroeconomic scene has dampened demand sentiment and prices accordingly.


Market participants awaited Jerome Powell’s semi-annual congressional testimony, with Friday’s focus the nonfarm payrolls report. The market expected the US economy will have added 200,000 new jobs in February against 517,000 in January, with the unemployment rate holding steady at 3.4%. That is the good news.

Recent macro data suggests, however, that the Fed still has work to do in taming inflation, Atlanta Fed President Raphael Bostic suggested that the next rate rise would be 0.25%, indicating that the velocity of rate rises may have peaked. US equities moved lower last week, after Fed Chairman Jerome Powell told US lawmakers that the central bank would keep interest rates higher, as needed, to fight inflation. Powell stressed that the recent strong macro data, while possibly related to seasonal adjustments, suggests the Fed might have to raise rates higher than expected. A Fed meeting on March 22 is expected to result in another rate hike. Powell was scheduled to speak to Congress again Friday. 

The White House Holds Roundtable on Decarbonization

Executives from US aluminum companies recently met at the White House for a roundtable discussion on how businesses are investing in new technologies to decarbonize the value chain across the industrial sector. The session was not limited to aluminum producers and included executives from the chemicals, iron and steel, cement, and concrete sectors.

The talks were focused on the need for the US to take a leadership role in growing a global green economy, and how public and private investments (paired with new programs under the Inflation Reduction Act and Bipartisan Infrastructure Law – such as tax credits, grants, and loans) can accelerate industrial decarbonization and increase US competitiveness while boosting jobs. US producer Alcoa, Norwegian producer Norsk Hydro and aluminum products manufacturer Constellium were among the delegates, and issued a statement on the key topics discussed.

The increased federal interest in aluminum and other critical materials is evident across several federal agencies. The US Department of Commerce, the Department of Energy, the Customs and Border Protection agency have all been active, working alongside industry participants and trade associations to develop strategic support for long-term metal supply security.  There is little doubt that the recent 200% tariff on Russian aluminum imports, and recently passed legislation focused support on US manufacturing and aluminum intensity in domestic products.

2023 Q1 Shipments Off to Sluggish Start But Better Than December

Still too early in the game to call the quarter, but mill shipments through January’s results are lackluster. With 2021 and 2022 H1 being tough acts to follow, January shipments were lower year over year (y/y). Wire, rod and bar was -5% behind the 2022 mark, with aluminum extrusions suffering -18.1% deficit in January y/y. Sheet and plate demand fared best, missing the 2022 tally by -0.6% as plate and heat-treat applications carried the weight on improved demand from aerospace, auto and defense applications. Can sheet, extrusions and general fabrication applications are still working through 2022 inventory hangovers. Even with that inventory, extrusions and sheet and plate bounced up from a short-shipping December by 25% and 12.4%, respectively.

With lead times close by, and allocations no longer the issue, buyers can release orders much closer to actual demand and thereby reduce their metal price risk. US aluminum demand is the best option for global producers. Ocean container rates are down, and container availability is up again, opening import supply opportunities. Even as Section 232 tariffs remain in effect, and with the 200% Russian import tariffs in effect on April 10, import supply pressures will test US producer price discipline until demand, both domestic and globally, returns to pressure the supply side as it did during the Covid-19 recovery cycle. Clearly back into seasonal demand patterns, 2023 Q2 – Q3 cannot get here soon enough for aluminum producers. 

By Stephen Williamson, CRU Research Manager,

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