Key highlights from the global aluminium industry, April 2024

In April 2024, significant developments unfolded in the global aluminium industry, with one standout event taking centre stage: the United States and Britain took decisive action by prohibiting the London Metal Exchange (LME) from accepting new Russian production of aluminium, copper, and nickel. This strategic move aimed to pressure Moscow amidst the ongoing Ukraine-Russia geopolitical crisis. As a result, prices surged on the LME platform by approximately USD200 to USD330, while on the SHFE platform, the price uptick ranged between USD110 and USD120.

As we reflect on the financial performances of several leading aluminium houses for the full year 2023 and their Q1 2024 results, a pattern of moderate revenue growth emerges. While these results signal resilience within the industry, challenges loom on the horizon. One notable factor impacting the aluminium market is the tepid price rise throughout 2024, defying earlier predictions. Despite initial optimism for a robust demand and subsequent price surge, the reality has been less favourable. Anticipation persists for an upturn in demand and prices in the latter part of the year. However, the spectre of stagflation in the US market casts a shadow over global demand prospects.

Here are some significant developments in the aluminium industry that have generated considerable attention:

Nemak receives ASI Performance Standard Certification for its three aluminium auto component facilities

Nemak S.A.B de C.V, popularly known as Nemak, specialised in developing and manufacturing aluminium components for e-mobility, structure and chassis,  has reportedly received Aluminium Stewardship Initiative’s Performance Standard V3 (2022) Certification for its three global production facilities in Poland, Slovakia, and Brazil. The three facilities, named Nemak Slovakia s.r.o., near Ladomerská Vieska, Slovakia; Nemak Poland Sp. z o.o. in Bielsko-Biała, Poland; and Nemak Alumínio do Brazil Ltda. in Betim, Mato Grosso, Brazil, produce a wide range of automotive components. While the Slovakia facility manufactures engine blocks, transmission cases, and housing for electric engines, the Poland facility produces high-pressure diecasting, with production departments focused on powertrain components and vehicle structural parts. The Brazil facility specialises in engine blocks, cylinder heads, and transmissions. Nemak has received this certification after undergoing an independent, third-party audit at its Poland and Slovakia facilities by TÜV Rheinland Cert GmbH and at its Brazil facility by DNV Business Assurance Services UK Ltd.

China’s bauxite imports show 4% Y-o-Y rise in Jan-Feb’24 due to domestic refineries' dependency on overseas ores

China's bauxite imports from January to February 2024 totalled 24.4794 million tonnes, up 4% annually. In January, imports were 13.2019 million tonnes, increasing 11.24% month-on-month and 7.15% year-on-year. February saw a month-on-month decrease of 14.58% but a year-on-year growth of 0.53%, with 11.2775 million tonnes imported. Guinea supplied 9.2859 million tonnes in January (up 12.95% M-o-M, 1.52% Y-o-Y), while Australia provided 3.4759 million tonnes (up 9.66% M-o-M, 50.89% Y-o-Y). In February, China imported 8.8903 million tonnes from Guinea (down 4.26% M-o-M, up 12.51% Y-o-Y) and 2.0106 million tonnes from Australia (down 42.15% M-o-M, up 0.65% Y-o-Y). Ghana became the third-largest exporter in February, sending 123,200 tonnes, surpassing Turkey's 113,900 tonnes. From Brazil, Laos, and Malaysia, China imported 60,300 tonnes, 55,500 tonnes, and 23,700 tonnes in February.

Vedanta nears two-thirds of its nameplate capacity goal at Lanjigarh alumina refinery by adding 1.5 MTPA

Vedanta Aluminium reported that it commissioned an additional 1.5 million tonnes of annual alumina capacity at its Lanjigarh refinery in Odisha. Earlier, the refining capacity of the unit was 2 million tonnes per annum, and with the new capacity, it has increased to 3.5 million tonnes, said Vedanta Aluminium in a statement. Vedanta's plan is to add 1.5 million tonnes of capacity more to the refinery and bring it to a total of 5 million tonnes per annum. The Group also aims to increase its aluminium production capacity to 3 million tonnes per annum from 2.37 million tonnes at present. All these expansion efforts will bring Vedanta closer to its ultimate goal of becoming one of the top three global producers in the world aluminium market.

US and UK tighten grip on Russian metal trade

The US and UK have implemented fresh limitations on trading Russian aluminium, copper, and nickel, causing ripples throughout global metal markets. New regulations have been imposed, barring the delivery of fresh supplies from Russia to the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME). These restrictions encompass copper, nickel, and aluminium manufactured on or after April 13. The United States is also enforcing a ban on Russian imports of these three metals. Despite these measures, Russia is likely to be able to sell its metals, as the sanctions do not impede non-US individuals and entities from purchasing Russian copper, nickel, or aluminium. While the LME holds significant influence in setting global prices, most metal transactions occur directly between miners, traders, and manufacturers, bypassing LME warehouses entirely. Notably, since 2022, there has been a notable increase in Russian metal sales to China, as some Western buyers have sought alternative suppliers.

The newly imposed restrictions are poised to significantly impact prices within the London Metal Exchange (LME), a pivotal benchmark in numerous contracts worldwide. Over recent months, the abundance of Russian metal has exerted downward pressure on LME prices, especially in the case of aluminium, leading to non-Russian supplies commanding a premium.

US Government triples 7.5% tariff on Chinese aluminium and steel imports; Aluminum Association applauds the move

According to a report, United States President Joe Biden has tripled the current 7.5 per cent tariff on Chinese aluminium and steel imports and is putting pressure on Mexico to prevent China from shipping metals to the United States via Mexican ports. In response to this move, the White House said in a statement, "President Biden knows that steel is the backbone of the American economy. American workers in the steel and aluminium industries face a significant challenge from Chinese exports of steel and aluminium."

Last year, Chinese aluminium and steel exports to the United States were valued at US$1.7 billion. Mining giant Rio Tinto pointed out that China's domestic steel demand stood stagnant in early 2024 and so its exports rose 30 per cent year-on-year during the first two months of the year. The Biden administration says China's overproduction of aluminium and steel adversely affects America's metal industry. Welcoming the US government's decision, the Aluminum Association said it would work closely with the United States Trade Representative to implement the White House directive. The Aluminum Association had long been advocating for an increase in the Section 301 tariffs on aluminium imports from China.

Hydro Extrusions' third press line goes operational in Rackwitz

Hydro Extrusions recently bolstered its extrusion capabilities in Rackwitz, Germany, with the introduction of a third extrusion press line, officially operational in late 2023. This €11 million initiative encompasses the installation of a cutting-edge 22 MN, 8-inch upcycled extrusion press, complemented by an energy-efficient aging oven. This strategic investment underscores Hydro's commitment to the strong German market.

The newly integrated P22 extrusion press line significantly augments production capacity for superior-quality intricate extruded profiles. This enhancement empowers the Rackwitz facility to effectively cater to escalating demand across construction, transportation, and general mechanical engineering sectors. Furthermore, deploying this state-of-the-art line underscores Hydro's dedication to enhancing operational efficiency and sustainability, ensuring an elevated level of service for its clientele. Since its establishment, Hydro has consistently committed to advancing and enlarging its facility. In addition to its extrusion capabilities, the plant features a cutting-edge anodising line and extensive fabrication capacities. The introduction of the anodising line in 2010 signified a pivotal achievement, elevating the site into a comprehensive, all-in-one destination for customers.

Bonnell Aluminum's TSLOTS line prepares for its debut in the Southeastern United States

Bonnell Aluminum, an esteemed subsidiary of Tredegar Corporation, is making waves once again as it announces the expansion of its TSLOTS line into the Southeastern United States. This strategic move aims to cater more efficiently to the region's burgeoning demand for versatile aluminium structural framing systems. Established as a premier manufacturer of custom-fabricated aluminium extrusions, Bonnell Aluminum has garnered acclaim across diverse sectors, from construction to automotive industries. With the addition of the Newnan, Georgia facility, Bonnell Aluminum reinforces its commitment to meeting the evolving needs of its clientele. By strategically positioning manufacturing and distribution hubs closer to customers, the company aims to streamline operations and enhance accessibility to its renowned TSLOTS product line.

Former coal-fired power station to be the manufacturing hub of aluminium solar panels in Australia

Anthony Norman Albanese, the 31st Prime Minister of Australia, has recently announced that the New South Wales-based former coal-fired power station, Liddell, will be turned into a solar panel manufacturing hub. The upcoming Solar SunShot program project is expected to be a part of the $1 billion federal program. The ultimate goal is to establish a robust supply chain, starting with producing glass for panels, followed by aluminium frames, and eventually, the solar photovoltaic cells, along with the pure polysilicon required for manufacturing.

The initiative will help ramp up the production of solar panels within Australia. Although one in three Australian households has solar panels, marking the highest rate globally, only 1 per cent of these panels are domestically manufactured. This new program is named the Solar SunShot program, and the federal government is aiming to transform this landscape by offering production subsidies and grants to bolster Australia's presence in the international solar manufacturing supply chain. Speaking to ABC Radio Newcastle, Mr Albanese disclosed plans for the closed Liddell Power Station site near Muswellbrook, which will be repurposed into a solar manufacturing hub.

Trivium Packaging eyes strategic sale, secures $2.5 billion in financing

With more than 60 locations around the globe and annual revenue of approximately $3.1 billion, Trivium Packaging, one of the leading producers of aluminium and other metal packaging, is on the brink of a transformative financial transaction that could redefine its trajectory. Reports indicate that private credit funds are piecing together a sizable financing package, potentially reaching as high as $2.5 billion, to support the sale of Trivium Packaging. This development highlights the considerable enthusiasm and confidence surrounding the packaging sector, especially for companies with established market positions like Trivium.

Trivium's current shareholders, Ardagh Group SA and the Ontario Teachers' Pension Plan Board are potentially exploring the sale of the company and considering the possibility of creating a staple financing package. This package would feature tranches denominated in U.S. dollars and euros, streamlining the acquisition process for interested parties. Such a strategic move demonstrates the shareholders' dedication to facilitating a seamless transition and underscores their commitment to realising maximum value from the sale. As the sale process continues and its results remain undetermined, the possibility of Trivium's valuation exceeding $3.5 billion speaks volumes about the company's market stature and financial robustness.

Tax relief for scrapped cars: Will Estonia's new law ease burden on owners?

Around 200,000 vehicles in the Estonian traffic register have destroyed, lost, or suspended registrations. Starting in 2025, owners of these vehicles may be required to pay motor vehicle tax. However, the Ministry of Climate has proposed a bill to exempt individuals who have vehicles with unknown whereabouts registered in their name, as well as those whose cars lack necessary documentation for scrappage, from paying this tax. Estonia is a country in Northern Europe that borders the Baltic Sea and the Gulf of Finland. The World Bank designates Estonia as an advanced, high-income market economy noted for balanced government budgets, a flat income tax, low tariffs, and low public debt.

In the future, scrap metal owners will have the opportunity to bring their undocumented, old, and unusable scrap metal to metal purchase facilities, thereby significantly enhancing the visual appeal of streetscapes or yards. As per the legislation, removing such vehicles from the registry will be complimentary until 2026, after which a fee of 800 euros will apply. Northern Europe's leading recycling services company, Kuusakoski, calls on Estonian citizens to bring their scrap to benefit their wallets and the environment. Kuusakoski efficiently recycles up to 95 per cent of the materials from each scrap car. Once processed, Kuusakoski issues an electronic scrapping certificate to the Traffic Register of the Transport Agency, resulting in the removal of the scrap vehicle from the database.

Conclusion

The aluminium sector finds itself at a crossroads, balancing cautious optimism with a prudent approach to market dynamics. While moderate revenue growth underscores the industry's adaptability, the uncertain trajectory of aluminium prices and the broader economic landscape demand careful navigation.

As stakeholders in the aluminium market continue to monitor developments, strategic agility and foresight will be key in charting a course through these uncertain times.