CRU aluminum news roundup: Baltimore port incident pushes regional premiums higher

Written by Matthew Abrams

PCE inflation data up 2.5% in February but June Fed rate cut still possible

Personal Consumption Expenditures (PCE) inflation data was released on Friday, March 29, despite the stock market being closed for Good Friday. The year-over-year (y/y) PCE price index rose 2.5% in February, in line with market expectations but up from the 2.4% growth seen in January. The core PCE index, which excludes food and energy prices, rose 2.8% y/y in February, also in line with expectations and slightly down from 2.9% in January.

Overall, inflation risks remain contained after this report as the Federal Reserve’s Jerome Powell himself also anticipated a likely increase in the PCE index after last week’s meeting on interest rates. This means the possibility of a first cut in June is still possible.

Midwest premium jumps higher on better outlook for late 2024

The US Midwest aluminum premium rose over 2 ¢/lb and is trading between 20–20.5 ¢/lb. The recent bridge accident in Baltimore proved to be the catalyst to finally push the premium higher after sitting below 18 ¢/lb for much of 2024 Q1. There was a consistent contango building throughout much of this time due to both hopes of a Fed rate cut sparking demand, and cost pressure from the Red Sea conflicts. The disruption at the port helped support this week-over-week (w/w) increase, but ultimately this growing optimism and other cost pressures were already pushing the premium in this direction anyway.

The rest of the year is still uncertain as demand has started improving but there are concerns surrounding the likelihood of the momentum being sustained. One bright spot through Q1 has been a steadily improving residential construction market. Other major end-use segments are steady, with can sheet recovering, and automotive build rates moving higher. Demand stumbling on its road to recovery is still a risk to the premium, but overall it has built support firmly above 20 ¢/lb.

Coca-Cola introduces new aluminum cans for its Smartwater

The Coca-Cola Company’s Glacéau smartwater brand has announced the release of 12-oz. aluminum cans with a new visual design. The new can aims at answering consumers’ environmental concerns while ensuring convenient consumption in the spring and summer months.

A creative campaign will start in early May to advertise the new packaging. Key visuals will be displayed across out-of-home, radio, and social/digital media, including close-up images of the new cans. Signs will also be displayed in stores to encourage consumers to “crack, sip, refresh”.

Other beverage companies have joined Smartwater in transitioning into aluminum packaging, especially in the travel sector. Diageo’s Baileys Original Irish Cream liqueur will be sold in 70cl aluminum bottles, designed to be five times lighter than glass and reduce carbon by 44%, at select airports; while Sustainaholics’ full range of spirits will be available in 100% post-consumer recycled aluminum bottles on select EasyJet flights.

China adds record 36.72 GW photovoltaic solar power in first two months of 2024

The increase in China‘s photovoltaic (PV) solar power continues to be strong so far this year, with a record-breaking installation of 36.72 GW in the first two months of 2024, as per the latest data released by the National Energy Administration.

At the end of February, China’s total power capacity reached 2.97 terawatts (TW), up by 14.7% y/y. Solar power alone contributed to about 650 GW – a sharp increase of 56.9% y/y. Wind power installations also showed a solid growth, reaching 450 GW, up by 21.3% y/y.

This additional 36.72 GW of solar capacity in China underscores China’s accelerating shift towards solar energy. In 2023, China’s PV power generation capacity saw a significant surge, with newly added grid-connected capacity hitting 216.3 GW, marking a 147% increase from the previous year. The country is now set to break another record in newly installed capacity this year.

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