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Global aluminium market is in a surplus -Liberum
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U.S. duty-paid physical premiums climb
By Swati Verma Jan 30 (Reuters) - Rising aluminium supplies from top producer China are subduing benchmark prices for the metal, but regional cost variations have emerged as the energy crisis curtails production in Europe and demand strengthens in the United States.
Benchmark aluminium on the London Metal Exchange was trading around $2,617 a tonne on Monday, significantly off a record high of $4,073.5 hit last March after Russia's invasion of Ukraine raised supply worries. In the physical market, buyers also pay a premium over the benchmark price which typically covers transport and handling costs and taxes.
In Japan, buyers were offered premiums of $95-$105 per tonne
for January-March primary metal shipments, down 4% to up 6% from
the final quarter of 2022. The European duty-paid premium at $279 a tonne is
broadly in line with $281 at the start of the year, while in the
United States it is trading at $595 a tonne, up nearly
15% since the start of January.
"A potential demand driver for aluminium this year is the
United States... it seems to be very active at the moment," said
Liberum analyst Tom Price.
"Everyone was worried about Europe's aluminum production
collapsing because they had energy issues, but all they did was
import it from China, which had a surplus," Price added. "We
still have a global surplus."
Liberum expects global production of 69.6 million tonnes
this year, giving rise to an 80,000-tonne surplus, down from
110,000 tonnes in 2022.
Output in China, which accounts for nearly 60% of global
supplies, jumped to a record high last year boosted by newly
launched capacity and a relaxation of power supply restrictions,
despite production cuts in some provinces where drought led to
shortages of hydro-power.
In contrast to Liberum's Price, Edward Gardner, an analyst
at Capital Economics, expects a global aluminium market deficit
of 843,000 tonnes this year from an estimated deficit of around
400,000 tonnes in 2022.
"It's not until advanced economies start to recover in the
second half of the year, and China’s recovery becomes more
established, that we expect aluminium prices to start a
sustained upward trajectory," Gardner said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global aluminium supply and demand balance Duty-paid aluminum premiums LME aluminium prices are off record highs ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Swati Verma; editing by Pratima Desai and Kirsten Donovan)
