Despite UC Rusal’s fight with LME, aluminum price index holds steady

The month of March saw a decision in the closely-followed lawsuit filed by the world’s largest aluminum manufacturer, UC Rusal, against the London Metal Exchange over long queues to remove product from LME warehouses. It was also the month that CME Group, owner of the Chicago Mercantile Exchange, announced a new aluminum futures contract that will begin trading out of the Midwest soon.

The monthly Aluminum MMI® registered a value of 89 in April, on par with March’s value. The 3-month LME price closed the month of March at $1,773 per metric ton, experiencing very low volatility during last month.

While the aluminum price remains at its lowest levels, physical premiums keep increasing their importance in the total price an industrial buyer pays for his aluminum products. This is making aluminum buyers’ lives a lot harder as they can’t find ways to completely hedge their risk exposure. Meanwhile, the CME Group is working on solving this problem by introducing its new aluminum futures contract, starting in May. We will watch closely if these developments put pressure on the LME queues.

Regarding the LME price, nothing signals an upturn in aluminum prices. Aluminum continues in its perfect long-term downtrend and prices keep showing weakness.

Prices reacted after registering a new low in February and we can see how in March, aluminum is clearly finding resistance to go higher. The scenario looks similar to what we saw in January, when volatility contracted and prices finally fell to new record lows. We wouldn’t be surprised to see aluminum falling to new lows in the coming months.

(MetalMiner is the largest metals information website in North America targeting a manufacturing and metals procurement audience.)