For the Quarter Ending September 2022
In the US market, Aluminium Ingot prices witnessed an upsurge amidst the fears of recession during the third quarter of 2022. According to market participants, gliding energy costs now significantly impact aluminium smelters more than ever before. As a result of the ripple effect, the aluminium smelters raise their production costs, affecting the Aluminium prices. Aluminium prices, on the other hand, rose earlier in the session due to LME production curtailment amid rising energy costs but succumbed later to macroeconomic pressures as weak growth means lower demand for base metals used in many industries. When the dollar is strong, metals traded in US dollars are more expensive to holders of other currencies, and rising interest rates and weak global demand have all weighed on industrial metal prices. As a ripple effect, the Aluminium Ingot (99.9%) prices for CFR Albama Port (USA) settled at 3820/MT.
Aluminium ingot prices in the Chinese market showed a mixed trend due to fluctuating demand and higher inventory levels. According to market participants, the supply of aluminium ingots is still increasing, while the most recent inventory statistics show that inventories of aluminium ingots have stopped falling, indicating the impact of the seasonal low in July. Furthermore, base metal prices were under severe pressure as increasingly hawkish central banks harmed the global outlook for construction and manufacturing activity. At the same time, Chinese smelters increased output as factories resumed operations with increased capacity following Covid lockdowns. Domestically, high temperatures combined with scarce rainfall weighed heavily on aluminium production in Sichuan, where almost all smelters suspended production activity, resulting in a loss of about 1 million mt. Traders are aware of the market's concerns about falling aluminium supply, which could push up aluminium prices, but in the long run, demand will remain weak, and aluminium prices will face downward pressure once production resumes in the region. Thus, the Aluminium Ingot (IC 20) discussion for Ex Shanghai (China) settled at USD 2749/MT.
During the third quarter of 2022, the Aluminium Ingot prices surged owing to the bullish demand outlook in the European region. As per market players, the production activity fell in the European market during Q3 amidst skyrocketing energy costs. Overall, aluminium production has been limited recently, leading to a decline in supply. In the short term, traders should be aware of the market's concerns about falling aluminium supply, which may push up aluminium prices; however, demand will continue to be sluggish in the medium to long term, and aluminium prices will face downward pressure once production resumes in the future. In mid-August, Norsk Hydro announced its production suspension plans for an aluminium smelter. Market players cite that surging energy costs have induced temporary shutdowns of smelters in European regions, supporting the recent uptick in base metal prices. As a result, the Aluminium Ingot (99.9%) prices for FOB Hamburg (Germany) settled at USD 3658/MT.
For the Quarter Ending June 2022
Due to weak demand, rising production costs, supply chain delays, and the Federal Reserve's aggressive monetary policy, Aluminium ingot prices fell in the United States during the second quarter of 2022. Market participants cite that manufacturing activity has slowed due to supply-chain delays and labor shortages. Furthermore, new orders and stockpiles were limited, and customer resistance to high prices slowed new orders, but this also reflected deficiencies and growing concern about the outlook. The drop in domestic demand and improved Aluminium production activity in the face of rising inflationary pressure exacerbated market concerns. However, the bearish macroeconomic outlook and dwindling demand prompted a drop in quotation inquiries. The closure of the Hawesville Aluminium Smelter exacerbates the supply chain and impacts the US cumulative demand outlook.
Chinese Aluminium ingot prices fell in the second quarter of 2022 as demand in China fell amid sporadic lockdowns. According to market participants, the currencies have shifted unfavorably, with the dollar strengthening and the yuan weakening. As work and production resumed in Shanghai and other locations and market sentiment improved, domestic Aluminium downstream consumption increased. Although the procurement was completed as needed and the market transaction remained unsatisfactory, the warehouse issue continued to impact the poor market transaction. Although the domestic pandemic's impact on transportation eased in May, terminal inquiries remained low. Consumers are likely to buy fewer large appliances as global inflation rises, which reduces demand for industrial metals. The world's major central banks raising interest rates to control inflation may reduce the requirements.
Aluminium ingot prices in European nations fell in the second quarter of 2022 compared to the first quarter of 2022, owing primarily to fewer buying inquiries amid fluctuating LME prices. However, due to hostilities between Eastern European countries and rising crude oil prices, the global price of Aluminium skyrocketed during the first quarter. Furthermore, supply disruptions and Western market sanctions imposed on Russia were factors in the rise in Aluminium prices. Moreover, premiums fell due to sluggish demand from the automotive industry, dealing with chip shortages. Due to a constrained container market and high freight charges, metal could not be transferred from Asia to Europe or North America, where premiums are significantly higher. European Aluminium smelters continued to reduce production activity due to high energy costs exacerbated by Russia's invasion of Ukraine.
For the Quarter Ending March 2022
Because of the tight demand-supply balance, Aluminium ingot prices have skyrocketed in North America. According to market participants, Aluminium prices increased roughly 21% in March 2022 compared to the end-January 2022, owing to rising geopolitical risks amid the ongoing Russia-Ukraine conflict. In the first week of March 2022, Aluminium prices reached an all-time high of USD 3870/tonne, indicating extreme tightness in the global supply chain. The lower inventory level of Aluminium, combined with a ban on Russian Aluminium exports, has exacerbated metal availability in the rest of the world, keeping prices high until normalcy is restored. Aluminium ingot prices remained high as a result during the first quarter.
In the Asia Pacific, Aluminium Ingot prices witnessed an upward trend in the first quarter of 2022. Due to the outrage caused by the pandemic, China put pressure on Chinese authorities to adhere to strict policies in the first quarter of 2022. Along with it, China's controlled carbon emission policy exerts market pressure. As a result, production activity and the supply chain in China are disrupted. However, manufacturers in India claim that the production margin of Aluminium is greater than the demand. Market participants are hoping to break profit records; India, one of the leading Aluminium exporters, will face an opportunity to export Aluminium at high prices. The European demand will boost India's Aluminium exports, propelling the country to the top of the list. Aluminium ingot prices rose due to bullish market sentiments in the first quarter of 2022.
In Europe, amid ongoing hostilities between Eastern European nations, Aluminium ingot prices have risen. This increase in Aluminium Ingot prices is primarily due to the Russia-Ukraine conflict; Russia is the fifth largest exporter of Aluminium, accounting for 6-8 percent of global Aluminium exports. Ukraine is a supplier of alumina and Aluminium ores to Russia. The conflict between Russia and Ukraine disrupted the value supply chain of various commodities, primarily metals and crude oil. The Australian ban on exporting alumina and bauxite to Russia has posed a significant threat to aluminum production. Australia exports nearly 18-20% of its Aluminium ore to Russia, and the sanctions have reduced production activity. However, other factors influencing production growth include rising coal prices and winter power shortages. As a result of reduced metal production, European nations rely on Aluminium imports. The sanctions imposed on Russia will not be easily lifted. As a result, Aluminium prices are expected to rise by 5-20% in the coming quarter.