CRU aluminum: US Midwest premium remains slow in beginning of 2024

Written by Marziyeh Horeh

The LME three-month price was broadly stable on the morning of Jan. 19. It was last seen trading at $2,170 per metric ton (mt). The $2,200/mt level is now acting as a resistance it seems, but the break of the previous support level has not inspired a sell-off, at least not for now.  

Meanwhile, SHFE cash was also stable on Friday, with RMB19,000/mt also acting as a resistance. The cash contract settled at RMB18,675/mt and last traded at RMB18,675/mt.

US Midwest still slow through first few weeks of the year

The US Midwest premium was flat again week over week (w/w), still at 18.8-19.4 ¢/lb. While other regions have seen upward pressure on premiums due to the disturbances in the Red Sea, the US premium remains flat. Most trading has been done further out, with most activity focused on H2 2024 or the start of 2025. This aligns with important demand trends as overall consumption is not expected to start recovering until mid-year.

Interest rates are the main topic of conversation when it comes to demand. Many expected more aggressive rate cuts, but the US Federal Reserve has not shown any signs of lowering the funds rate yet. A recent overheated retail report could make this even more unlikely as consumers continue to spend through higher pricing and higher financing rates. Even if there are near-term cuts to borrowing rates, the full effect likely will not be felt for months as consumers react, and some might choose to wait until the bottom. This is particularly important for the building and construction end-use sector, which is expected to trend mostly sideways until 2025.

Alcoa’s loss greatly widens in 2023

Global aluminum company Alcoa posted a net loss of $651 million last year, more than five times greater than the $123 million recorded in 2022. Factors other than lower aluminum and alumina prices as well as higher production costs were in play. They included charges of $117 million related to the permanent closure of the Intalco smelter in Washington state, $53 million for employee obligations at its San Ciprian smelter in Galicia, Spain, and $33 million for the restart costs at its Alumar smelter in Sao Luis, Brazil.

Alcoa has now launched a productivity and competitiveness program with the goal of saving around 5% a year on operating costs. Annual expenses are expected to be approximately $100 million lower on a run-rate basis by Q1 next year. The numbers exclude raw material, energy, and transportation costs, which are already under active management and cost control programs, Alcoa said.

In 2023, sales revenue fell 15.2% compared with the previous year to $10.6 billion. Bauxite production was 41.0 million mt (down 2.6%), alumina 10.9 million mt (down 12.8%), and aluminum 2.11 million mt (up 5.0%). Shipments of bauxite to third parties were 7.6 million mt (up 117%) and those of alumina at 8.70 million mt (down 5.1%). Aluminum deliveries totaled 2.49 million mt (down 3.1%). Pittsburgh-headquartered Alcoa is forecasting this year’s alumina production to be between 9.8 million mt and 10.0 million mt, with shipments ranging from 12.7 million mt to 12.9 million mt.

“The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfill lcustomer contracts due to the curtailment of the Kwinana refinery [in Western Australia],” the company said. Alcoa is projecting 2024 aluminum production to be between 2.2 million mt to 2.3 million mt, up on last year due to smelter restarts. Aluminum dispatches are anticipated to be between 2.5 million mt and 2.6 million mt.

Hydro joins the First Movers Coalition’s new ‘green’ supplier database

The First Suppliers Hub – a tool for companies moving from climate commitment to action – was launched at the World Economic Forum (WEF) annual meeting in Davos, Switzerland, on Jan. 16. Hydro indicated Friday in a statement that it has qualified as a supplier of its low-carbon aluminum, as one of the few companies in the world providing aluminum with a carbon footprint of less than one-fourth of the global industry average.

The announcement comes as Hydro is in Davos to engage in discussions about how to change the way materials are produced. For Hydro, a key initiative to accelerate the green transition is its participation in the First Movers Coalition (FMC). FMC is a coalition of companies using their purchasing power to decarbonize heavy-emitting sectors, representing 30% of global emissions, led by the WEF and the US government.

“To accelerate the green transition, the way we produce materials must change. It matters where and how materials are produced, and that is why initiatives like the First Suppliers Hub are crucial to simplify the access to low-carbon technologies and materials needed to enable true decarbonization of society,” said Hydro President and CEO Hilde Merete Aasheim.

Ten electric vehicles pave the way for a greener future

Hydro Alunorte, an alumina refinery in Brazil, is actively advancing its decarbonization strategy by integrating 10 electric vehicles (EVs) into its fleet, signaling a commitment to sustainability. With a goal to achieve one of the world’s lowest emissions rates by 2025, the company is replacing existing fossil fuel-powered vehicles, solidifying its position in the top 25% for emission-reduction efficiency. The newly introduced EVs boast a 298 km range (185 miles) and recharge at dedicated stations on Hydro Alunorte’s premises, offering not only environmental benefits but also a more comfortable and quieter driving experience. Operational within the refinery, these EVs contribute to efficient transportation to nearby locations, marking a transformative shift towards a greener and technologically advanced future for Hydro Alunorte.

Latest in Economy