LME aluminum continues to show resilience against a firmer US dollar

Written by Guillaume Osouf

The LME 3-month price is stable on the morning of March 26th and was last seen trading at $2,325/mt. The price has overcome an important resistance level at $2,300/mt but it remains to be seen if support can be built above that level.

The LME price has been gradually moving up since last week despite a rebound in the Dollar Index. The stronger dollar comes despite the Fed last week maintaining a dovish stance. Instead, it seems the US currency strengthened on the back of external factors such as the unexpected rate cut by the Swiss National Bank and dovish stances from the Bank of England and Reserve Bank of Australia. There were also encouraging US economic indicators such as the latest PMIs, existing home sales, and unemployment claims. Later this week, close attention will be paid to the latest PCE price index report, which is the Fed’s preferred inflation gauge, to be released on Friday.

Meanwhile, SHFE aluminum continued to trade firmly although some of the day’s gains were erased by the close. The cash contract first settled at RMB19,520 /t and last traded flat at RMB19,470 /mt.

US Department of Energy announces major funding for decarbonization projects

Yesterday, the Biden Administration announced a landmark industrial funding to support potentially transformational industrial decarbonization projects. In total, thirty-three projects across eight industrial sectors will receive up to $6 bn in federal funds from the US Department of Energy’s (DOE) Office of Clean Energy Demonstrations (OCED).

The program also aims to stimulate an even larger influx of private capital requiring half or more of the cost of each project be covered by non-federal funding. The goal is to support large-scale decarbonization projects in the industrial sector. The selected projects will enter cooperative agreements with DOE, which means they will undergo engineering design, development, permitting and construction in close coordination with DOE over the next three to seven years.

In the Aluminum and Metals category, a total of five projects have been recognized, representing over $900 M in federal investment. The companies that were granted funding are Wieland Recycling, Century Aluminum, Constellium, Golden Aluminum and Real Alloy Recycling. In particular, Century Aluminum declared earlier this week that it would use these funds to build the first new US primary smelter in 45 years. This was covered in more detail in the Aluminum Daily published yesterday. As for the other projects, more details can be found on the US DOE website.

China Hongqiao 2023 net profit increases 31.7% y/y

China Hongqiao recently announced its results for the FY 2023. Sales revenue increased by 1.5% y/y, reaching RMB133.624 bn. This led to a gross profit of RMB20.955 bn, up 14.9% y/y and a net profit of RMB11.461 bn, up 31.7% y/y. In 2023, the group’s primary aluminum production was 6.265 Mt – an increase of 3.7% y/y and the production of aluminum products totaled 770,000 mt, up 17% y/y.  

Hongqiao’s net income beat market expectations, mainly due to lower production costs and a higher-than-expected aluminum sales volume in Q4. The group expects the strong aluminum smelting margin to be sustained in 2024 thanks to lower coal and electricity costs.

Criminal case opened after fatal accident at Rusal mine

Authorities have launched an investigation into a possible criminal breach of health and safety regulations after a rockfall at a Rusal underground bauxite mine in the Urals, Russia, killed a miner. A trapped colleague was rescued. “Law enforcement bodies are investigating to determine whether safety instructions were issued and whether they were violated during underground work,” regional interior ministry spokesman Valery Gorelykh was quoted as saying by the Interfax news agency. “A substantiated procedural decision will be reached on the basis of the results of the inspection,” he added.

The incident happened in the early hours of March 25th, 1,130 meters underground at Kalyinskaya mine in the Severouralsk district and part of UC Rusal’s North Urals bauxite mining division. Preliminary information suggests a seismic incident caused a rock burst, Gorelykh said.

India launches anti-dumping investigation into Chinese aluminum foil

Last week, on March 21st, the Ministry of Commerce and Industry of India issued an announcement stating that it would initiate an anti-dumping investigation into aluminum foil originating from China. The announcement comes in response to complaints from Indian domestic producers Hindalco Industries, Shyam Sel & Power, Shree Venkateshwara Electrocast, Ravi Raj Foils, GLS Foils Product and LSKB Aluminum Foils.

The products involved are aluminum foil with a thickness of less than 5.5 microns for capacitors, involving Indian customs codes 76071190, 76072090, 76072010, 76071110, 76071999, 76071991, 76071995, 76071910, 76071994, 76071993 and 76071992.

The anti-dumping investigation period in this case ranges from 1 October 2022–30 September 2023 and the damage investigation period involves the years 2019–2021 and the ranges 1 April 2021–30 September 2022 and 1 October 2022–30 September 2023.

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