Aluminium prices for US consumers, especially from the transport, construction, and packaging industries, are decreasing as the market is anticipating tariff exemptions for producers in the United Arab Emirates and Bahrain.
This follows agreements by the two Arab states to establish ties between Israel, signed at a ceremony hosted by the US President Donald Trump at the White House in September.
{alcircleadd}
The United States aluminium prices are based on the physical premium AUPc1 and the benchmark price CMAL3 on the London Metal Exchange. The former is now at $263 per tonne from $335 mid-September, while the latter at $1,750 per tonne.
Jorge Vasquez, founder of consultancy Harbor Aluminum, noted that the United Arab Emirates exported about 550,000 tonnes of value added primary aluminium to the United States and Bahrain exported 150,000 tonnes in 2019.
"The peace agreement gives a reasonable case for the market to consider the possibility of an exemption on aluminum products from the UAE and Bahrain, in which case it would likely be based on hard quotas," said Vasquez.
Hard quotas could mean producers like Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba) struggle to sell more aluminium to the United States than they already do.
"Exemptions could have a larger, longer, lasting impact on premiums if the UAE or Bahrain starts shipping large amounts of primary aluminium to the U.S.," an aluminium trader said.
EGA, however, made no comment on its exports to the United States, but said that last year it sold a total of 2.60 million tonnes of cast metal, of which 87.4 per cent was value added products.
Alba also declined to comment on its United States exports.
The consultancy CRU estimates total production of aluminium by EGA and Alba to come in at 4.2 million tonnes this year and expects global supplies at 64.1 million tonnes, up 1.5 per cent from 2019.
Note to readers: AlCircle brings two-day event for aluminium industry players. We look forward to meeting you virtually at “Global Aluminium Expo 2020”on October 6-7, 2020. For registration, visit www.alcircleevents.com
Responses
