Aluminum swings in the spotlight — largely a tale of scarcity concerns and tariffs

Aluminum, like steel, has grabbed headlines in 2018. The all-in price of this primary metal used in everything from transportation, to construction, to consumer goods has fluctuated since January — sometimes widely — in large part a response to US trade ‘war’ concerns and supply scarcity. One effect of the 2018 tariffs and higher US aluminum prices: a scramble to ramp up domestic production. Century Aluminum, Alcoa and Magnitude 7 Metals are all working to restart three aluminum smelters idled for years. While much has been made about higher prices, on August 16, 2018, the US all-in price for primary aluminum was 0.5% lower versus January.  This dip, however, is about 10% less than the drop seen in other global markets, such as the EU, where prices are down some 10.9% on the same basis — more or less exactly the difference represented by the tariffs. Let’s examine how the US aluminum market trades and take a closer look at the price assessment methodology adopted by market participants across the aluminum value chain. The all-in US price of primary aluminum, aka P1020 grade (99.7% pure), has two components: the global underlying price traded on the London Metal Exchange, reflecting the value… continue reading

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