For the Quarter Ending June 2022
Aluminium Wire prices fell in the United States during the second quarter of 2022 due to weak demand, rising production costs, supply chain delays, and the Federal Reserve's aggressive monetary policy. According to market participants, manufacturing activity has slowed as manufacturers face supply-chain delays and labor shortages. Furthermore, new orders and stockpiles were limited, and customer resistance to high prices contributed to a slowing of new orders, but it also reflected deficiencies and growing concern about the outlook. The drop in the domestic demand and improved production activity of Aluminium amidst the rising inflationary pressure further aggravated the market queries. However, the bearish macroeconomic aspects and waning demand outlook further prompted quotation inquiries to drop. The cessation of the Hawesville Aluminium smelter further exacerbates the supply chain and impacts the cumulative demand outlook in the U.S.
Chinese Aluminium Wire prices fell in the second quarter of 2022, owing to shrinking demand in China amid sporadic lockdowns. According to market participants, the currencies have shifted unfavorably, with the dollar strengthening and the yuan weakening. Domestic Aluminium downstream consumption increased as work and production resumed in Shanghai and other locations, and market sentiment improved. The procurement was completed as needed, and the market transaction remained unsatisfactory, but the warehouse issue continued to impact the poor market transaction. Although the problem of poor transportation caused by the domestic pandemic eased in May, terminal inquiries remained modest.
Meanwhile, in June, domestic Aluminium inventories fell due to the scandal surrounding the repeated pledge of the same Aluminium wire stocks in a social warehouse. A surge in global inflation, driven partly by rising energy costs, means that consumers will likely buy fewer large appliances, lowering demand for industrial metals. Raising interest rates by the world's major central banks to control inflation may reduce the requirements.
In European nations, the Aluminium Wire prices declined in the second quarter of 2022 compared to the Q1 of 2022, mainly due to the limited buying queries amid fluctuation in LME prices. However, due to hostilities between Eastern European nations and rising crude oil prices, the price of Aluminium soared globally during the first quarter. Furthermore, supply disruptions and sanctions imposed on Russia by Western markets were factors in the rise in Aluminium prices. Moreover, premiums fell due to sluggish demand from the automotive industry, dealing with chip shortages. Again, 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. As a result of the high energy costs exacerbated by Russia's invasion of Ukraine, European Aluminium smelters continued to reduce production activity.
For the Quarter Ending March 2022
In North America, Aluminium wire prices witnessed soaring market sentiments owing to the tight demand-supply balance. According to market players, Aluminium prices showcased a sharp increase of roughly 20 percent in March 2022 compared to end-January 2022, fuelled by rising geopolitical risks amidst the ongoing Russia-Ukraine combat. Aluminium prices have touched an all-time high of USD 3870/tonne in the first week of March 2022, showing extreme tightness in the global supply chain. A low inventory level of Aluminium worldwide coupled with the sanction on Russian Aluminium exports has exacerbated the metal availability in the rest of the world, holding prices at a high level till normalcy is restored. Aluminium wire prices remained high during the first quarter as a ripple effect.
In the first quarter of 2022, China levied pressure on Chinese authorities to adhere to strict policies due to the outrage of the pandemic. Along with it, China's controlled carbon emission policy also impacts pressure on the market. Thus, in China, production activity and its supply chain are disrupted. However, in India, manufacturers claim that the production margin of Aluminium is more than the demand. Market players are hoping to exceed records in profit; India, one of the leading exporters of Aluminium, will confront an opportunity to export Aluminium at high prices. Aluminium prices have risen more than 20 % as compared with January 2022. The demand from the European nation will boost India's exporting activity for Aluminium, making India the lead exporter. As a ripple effect, the Aluminium wire prices witnessed bullish market sentiments during the first quarter of 2022.
In Europe, the Aluminium wire prices showcased a rising trend amid the ongoing hostilities between Eastern European Nations. This soar in Aluminium wire prices is mainly due to the Russia and Ukraine dispute; Russia is the fifth largest exporter of Aluminium, exporting 6-8% of Aluminium globally. Ukraine is one of the exporters of Alumina and Aluminium ores for Russia. In the conflict between Russia and Ukraine, various commodities' whole value supply chain has been disrupted, mainly metals and crude oil. Australia's ban on exporting Alumina and bauxite to Russia has caused a significant threat to Aluminium's production activity. However, the other factors affecting production growth are elevated coal prices and power pressures from winter. Thus, European nations depend on Aluminium imports as they have reduced metal production. The sanctions imposed on Russia are not going to be removed readily. Therefore, Aluminum costs are expected to surge 5-20% in the upcoming quarter.