CRU Aluminum: Metal Price Volatility Remains a Common Market Feature

Written by Stephen Williamson

The LME aluminum 3-month price moved higher this week wrapping up the week at $2,170 per ton on Aug. 25. With the price back above a support marker at $2,130 per ton implies an upward trend but noted that late in the week the price could not find support above $2,190 per ton. Range bound for now, the weekly $50 – $100 per ton swings are expected.

The SHFE aluminum price was broadly stable today despite reports of more Chinese stimulus to boost home sales. The cash contract settled at RMB18,625 per ton and last traded at RMB18,675 per ton.

China Yunnan Province Primary Restarts Not Reflected in Other Institutes’ Numbers

The International Aluminum Association (IAI) released primary production data for July. Total worldwide production on an annualized basis came in at 69 million tons – down just 0.4% from the revised June number of 69.2 million tons (previously 69.3 million tons). Production in World ex. China in July was reported at 28.1 million tons, broadly stable from June.

The IAI revised slightly down their June production estimates for Africa, North America, Asia Ex. China and the GCC by 1,000 tons each. There were also revisions for the GCC in April and May – this time up by 1,000 tons and 2,000 tons respectively.  

For Chinese production, the IAI estimated the annualized July output at 40.8 million tons – down marginally from 41 million tons in June. Although the Yunnan restarts are progressing well, the IAI data does not reflect that again this month. As a result, the gap between IAI and CRU is widening with CRU’s estimation for July production now 744,000 tons per year higher than IAI at 41.6 million tons annualized.  

The speed of the restarts in Yunnan has exceeded our expectations amid heavy rainfalls in the southwest part of China. In total, that is 2.1 million tons of capacity that has been put online since June, with some of it being new capacity. Indeed, in the previous two rounds of curtailment in September 2022 and February 2023, a total of 1.8 million tons of capacity was shut down, implying around 300,000 tons per year of fresh capacity was added recently. The total operating rate in Yunnan has now reached a record high of 5.6 million tons. Nevertheless, there were some offsetting factors for Chinese production, including lower output in Shandong, some disruptions in Sichuan and Shanxi and the slower ramp-up of Baiyinhua, but not to the extent of taking Chinese production down month-on-month.

Equity Firm Apollo Funds Completes Purchase of Arconic

Shareholders of the US aluminum product manufacturer, Arconic, last month approved the deal, which gives the company an enterprise value of around $5.2 billion. The deal was finalized on Aug. 18, 2023.

“The closing of this transaction with Apollo Funds brings new perspective combined with deep industry expertise that will benefit our customers, employees, investors and the communities where we operate,” said Arconic’s CEO, Tim Myers.

When the transaction was announced in May, he said the deal would allow the company to pursue its long-term strategic goals, which include:

  • Upgrades to key machining centers to maximize the full potential of its production capabilities.
  • Technology upgrades to bring plants and process controls to state-of-the-art standards; and
  • Investments in projects that will provide for a cleaner environment around its plants.

As a result of the takeover, the company’s shares will no longer trade on the New York Stock Exchange, but it will continue to operate under the Arconic name and brand. Irenic Capital Management will also have a minority stake in Arconic.

The Pittsburgh-based company produces aluminum sheet, plate, extrusions, and architectural products for the ground transportation, aerospace, building, construction, industrial, and packaging sectors. It was formed in 2017 when Alcoa split its downstream product manufacturing operations from the upstream bauxite-alumina-aluminum operations.

US Researchers Report Technological Innovation for Recycling Aluminum

Various media reports have noted that researchers in the US have developed a technological innovation capable of removing metallic impurities from recycled aluminum melts. This, in turn, allows the metal to be used for more diverse applications, including electric vehicle manufacturing.

The change is part of a research and development project supported by Remade, a 170-member public-private partnership funded in part by the US Department of Energy. The project named “Selective Recovery of Elements from Molten Aluminum Alloys” is led by Subodh Das, CEO of Phinix – an R&D company specialized in aluminum – who says the research ultimately seeks to develop technologies to improve the quality and increase the usage of recycled aluminum in US manufacturing.

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