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Aluminum prices climbing up sharply
Edited by : AL CIRCLE
2 min read
As the Public Service Commission weighs Century Aluminum's request for a special power rate tied to the price of aluminum, global prices have turned sharply higher.
Aluminum prices have surged nearly $400 per ton in recent weeks as European and U.S. central banks have announced plans to stimulate their economies.
The most recent was the U.S. Federal Reserve's open-ended commitment announced last week to buy at least $45 billion in mortgage bonds and another $40 billion in long-term U.S. Treasury bonds each month for the foreseeable future.
Economists believe the central bank moves will either stimulate economic activity or boost inflation, both of which mean higher prices for commodities.
Futures prices on the London Metal Exchange have risen by more than 22 percent since falling below $1,800 per ton in early August. After the Fed announcement last week, aluminum prices shot up by more than $100 to close at $2,177 per ton on Friday.
The price surge is occurring as the PSC weighs Century's request for a power rate structure that would change as aluminum prices fluctuated. When prices were low, the company would pay a lower rate; when prices were high, it would pay a higher one.
Century officials have said they need a new power rate structure to restart their Ravenswood aluminum smelter. That plant closed in February 2009, after the global recession caused aluminum prices to plummet. More than 650 workers lost their job in the shutdown.
Century spokeswoman Lindsey Berryhill said the recent spike in aluminum prices is just the most recent swing in a historically volatile market.
"We believe that the recent increase in the global price for aluminum is exactly why Century needs the requested 10-year special rate," Berryhill said. "Ups and downs in the aluminum market are not uncommon."
PSC spokeswoman Susan Small said commissioners are aware of the recent changes in aluminum prices. Small could not say how that would factor into the deliberations in the case.
Century said the power costs in both alternate plans are still too high to allow the company to profitably operate the plant.
The commission is expected to issue a decision by the end of September.
Aluminum prices have surged nearly $400 per ton in recent weeks as European and U.S. central banks have announced plans to stimulate their economies.
The most recent was the U.S. Federal Reserve's open-ended commitment announced last week to buy at least $45 billion in mortgage bonds and another $40 billion in long-term U.S. Treasury bonds each month for the foreseeable future.
Economists believe the central bank moves will either stimulate economic activity or boost inflation, both of which mean higher prices for commodities.
Futures prices on the London Metal Exchange have risen by more than 22 percent since falling below $1,800 per ton in early August. After the Fed announcement last week, aluminum prices shot up by more than $100 to close at $2,177 per ton on Friday.
The price surge is occurring as the PSC weighs Century's request for a power rate structure that would change as aluminum prices fluctuated. When prices were low, the company would pay a lower rate; when prices were high, it would pay a higher one.
Century officials have said they need a new power rate structure to restart their Ravenswood aluminum smelter. That plant closed in February 2009, after the global recession caused aluminum prices to plummet. More than 650 workers lost their job in the shutdown.
Century spokeswoman Lindsey Berryhill said the recent spike in aluminum prices is just the most recent swing in a historically volatile market.
"We believe that the recent increase in the global price for aluminum is exactly why Century needs the requested 10-year special rate," Berryhill said. "Ups and downs in the aluminum market are not uncommon."
PSC spokeswoman Susan Small said commissioners are aware of the recent changes in aluminum prices. Small could not say how that would factor into the deliberations in the case.
Century said the power costs in both alternate plans are still too high to allow the company to profitably operate the plant.
The commission is expected to issue a decision by the end of September.
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