Steel Markets

CRU Aluminum: Banking News Worrisome, But LME Values Unfazed

Written by Stephen Williamson

The LME aluminum three-month price steadied this week despite a whirlwind of upsetting news, finding its footing near $2,300 per metric ton.

That’s below the $2,500-per-ton mark we saw as 2023 opened on a more optimistic tone. The recent news from across the geopolitical and macroeconomic scene has dampened demand sentiment in the near term.


This week’s attention was also focused on the Federal Reserve’s interest rate decision to layer in another 25-basis point increase to help curb inflation. While it was a certainty that the stock market would be jittery on all this news, the LME did not exhibit any extraordinary movement. Of greater interest to CRU is that the Fed’s language on future interest rate increases was a bit more muted than earlier, more strongly worded rhetoric that additional increases in 2023 were likely. Much like the LME, the Federal Reserve appears to be taking a wait-and-see approach.

A bit further downstream in the value chain, the US Midwest aluminum delivery premium (MWP) moved lower on the flurry of dark news. CRU views the step down from $0.295/lb to $0.265/lb as attributable to slack demand thus far into 2023 Q1. The MWP had held steady through February and March to date in anticipation of demand awakening. This recent wave of negative market sentiment has buyers retreating a bit further because semis lead times are quite nearby (4-8 weeks) and because metal is available from rolling mills and extrusion shops. Only heat-treat plate and hard-alloy extrusions, for aerospace and defense applications, remain on extended lead times. The MWP, at the $0.26 – $0.27 value, is a good reflection of the true replacement cost for the services represented in the MWP survey price: freight, warehousing, insurance, and including the impact of Section 232 tariffs.

Russia increases exports to China

No surprise, but an affirmation this week via the latest data published by Chinese Customs. Russian imports to China of unalloyed primary aluminum (HS 760110) are on the rise. Between January and February 2023, Russia imports totaled 105,300 tons in the referenced commodity code. This is up significantly from 28,759 tons over the same period of 2022, well before the outbreak of war in Ukraine and the most recent 200% tariff levied on Russian aluminum headed to US ports.

The flow of primary metal from Russia to China has increased steadily since this time last year as more countries and businesses began to avoid Russian metal units. December 2022 has been the peak month so far, with single-month imports reported to be in excess of 80,000 tons. Russia continues stake a claim to China’s primary supply chain, now accounting for a nearly 70% supply position of China’s primary aluminum imports. Following Russia in that support are Iran and Bahrain.

B&C applications are first movers in near-zero carbon aluminum

The first aluminum extrusion profiles made with 100% post-consumer aluminum have been delivered by Hydro to the Innovationsbogen project in Augsburg, Germany. Hydro’s CIRCAL 100R aluminum used in this project reduces CO2 emissions by 527 tons and begins the support for the decarbonization of the European building industry.

According to Hydro, this is the first time an aluminum producer has delivered a near-zero carbon footprint product for a European building project. The WICONA brand will fabricate door, window, and curtain-wall extrusion profiles made from 100% post-consumer recycled feedstock. Near-zero aluminum is defined as a product where the carbon footprint is less than 0.5kg CO2 e/kg aluminum throughout the value chain.

Innovationsbogen is the first construction project to be built as part of the new Walter Innovation Campus in Augsburg’s Innovation Park. Construction of this project is scheduled to wrap-up by year-end 2023.

Aluminum New Order Index trending lower

The Aluminum Association’s latest release of its New Order Index supports how the market is feeling amid grim geopolitical and banking news. According to the latest release, total orders were down 6.3% from February 2022 and down 10.1% from January 2023. The January report did show a lift from December’s year-end index, but that uptick was short lived.

In February, all sheet and plate applications moved lower, with the standout being the heat-treat applications we had noted earlier being delivered into aerospace and defence applications. These alloys (2xxx, 6xx, and 7xxx) all remain on tight domestic supply and sustained demand. The non-heat treat alloys (1xxx, 3xxx, and 5xxx) remain mired in the inventory overhang from 2022 and await a return to seasonal demand patterns for beverage cans and building products.

Certainly, the short shipment days afforded the supply chain every February, compounded by regional weather delays, did not help the shipment tally. The best bellwether for demand will be mill shipments to aluminum service centers. Having destocked steadily throughout 2022 H2, service center demand will be a good barometer for demand’s Q2-Q3 return. However, with lead times close by, and no huge price risk indicators in the LME, service center buyers can wait a bit for clear demand signals to bring them back to market.

Learn more about CRU’s services at

By Stephen Williamson, CRU Research Manager,

Latest in Steel Markets