CRU: Glencore, Rusal extend ali contract, Vedanta turns to renewables, and more

The LME 3-month price for aluminum was broadly stable on the morning of May 24 and, at the writing of this article, was last seen trading at $2,627 per metric ton.

The price fell sharply during the week from its recent peak amid hawkish comments from Fed officials, as indicated in the minutes of the latest FOMC meeting. The price eventually stabilized May 23 and it looks now that support has been found at $2,600/mt.

US Department of Commerce announces new exclusions to Section 232
During the week of May 20, the Bureau of Industry and Security within the U.S. Department of Commerce published a revision to its exclusions process in the Federal Register regarding the Section 232 tariffs.

Effective July 1, Commerce will remove six of the general approved exclusions on aluminum.

The six HS codes involved are:

HS 7609.00.0000 (aluminum tube or pipe fittings)

HS 7604.21.0010 (hollow profiles of aluminum alloy)

HS 7604.29.1010 (certain profiles of heat-treatable alloys)

HS 7601.20.9080 (certain slabs)

HS 7607.11.6010 (boxed aluminum foil weighing not more than 11.3 kg or a thickness exceeding 0.1 mm)

HS 7604.29.5090 (other aluminum alloy bars, rods, and profiles)

“The revisions to the Section 232 exclusions process underscore our continuous dedication to refining our regulations, all the while prioritizing our national security concerns,” said Thea D. Rozman Kendler, assistant secretary for export administration. “These adjustments are the result of thorough examination and input from the public, aiming to uphold the strength and adaptability of the exclusions process in light of evolving global trade dynamics and domestic production capacities.”

Glencore and Rusal extend aluminum supply contract into 2025
Reuters announced that Glencore and UC Rusal have extended their long-term supply contract into next year, saying the amount traded so far only amounted to a fraction of the agreement’s maximum volumes. Glencore’s contract with Rusal was due to expire this year unless extended.

In 2023, Glencore bought aluminum worth $1.06 billion under the contract compared to a maximum of $3.93 billion worth, Rusal said in its annual report last month.

According to Reuters, last year’s purchases by Glencore from Rusal amounted to around 459,000 mt. Furthermore, the article stated that, during the first four years of the contract up to last year, Glencore bought about one-third of the maximum 5.24 million mt, quoting regulatory filings as its source.

Vedanta to focus on renewable energy on any new capacity
Vedanta declared it will no longer add coal-fired capacity to its aluminum business, according to a Reuters article quoting the company’s CEO in a recent interview.

India’s Vedanta Aluminum aims to increase the share of renewable energy it is using to 30% by 2030 from nearly 5% now. The producer currently has 4.8 GW of coal-based power generation capacity but John Slaven, the CEO of Vedanta’s aluminum business, said they were securing supplies of 1.3 GW of renewable energy– a mix of solar and wind power– from India’s Serentica Renewables.

“We don’t want to add additional thermal power. We have got to really increase our renewables, so that’s the focus,” Slaven said.

A similar announcement was made by Vedanta’s competitor Hindalco which also aims to rely on renewable power for any new capacity at its smelters.

Vedanta expects to raise its aluminum production capacity to 3 million mt by 2026 from about 2.4 million mt today and boost its refining capacity from 2 million mt to 6 million mt by 2026. Slaven also said the company expects to get environmental clearances for its first wholly owned bauxite mine in eastern India this year.

Learn more about CRU’s services at www.crugroup.com.