Aluminum price has reached the value of USD 2,534 per metric ton on the 6th of May this year, the highest price since the two-year maximum in April.2018. The consensus forecast from three leading sources(IMF, WORLD BANK, and the Australian government) for 2021 is USD2,004 per metric ton, the rise of aluminum prices occurs due to the high demand in China and growing concerns that China’s new climate policy, focusing on greenhouse gas emissions reduction, could limit the metal’s future supply, in its turn, steadily increasing demand could see the global aluminum market continue tightening into a deficit.
The U.S. dollar index fell for several days, and the foreign metal closed higher overnight. The March aluminum price on the London Stock Exchange closed up 2.04% to US$2496.5/ton. The Shanghai aluminum futures fluctuated and closed higher in the night trading, and the main 2107 contract closed at 19,765 yuan/ton. In the morning, the overall transaction in the spot market was moderate, and the willingness of holders to ship goods was still high, and downstream purchases were on demand. The mainstream transaction price in Shanghai is around 19710 yuan/ton, which is basically at the same level as futures. The mainstream transaction price in Guangdong is around 19,770 yuan/ton. The current consumption is still in the peak season. Although the production capacity has increased, it is still difficult to contribute to the output in the short term. The recent power cut in Yunnan has reduced the voltage output of the local electrolytic aluminum, and the output has been disturbed again. The short-term explicit inventory continues to disappear, and the price support remains strong. Aluminum prices tend to rise but never fall. It is recommended to operate on the low side.
Why are aluminum prices going up? Prices are surging amid a U.S. aluminum shortage few companies anticipated, which is forcing them into bidding wars with their own customers. Harbor's price assessment represents what “traditional suppliers,” like Alcoa Corp., Rio Tinto Group, Century Aluminum Co etc.
“The most important drivers supporting commodity prices are the global economic recovery and acceleration in the reopening phase,” said Giovanni Staunovo, commodity analyst at UBS Group AG. The bank expects commodities as a whole to rise about 10% in the next year.
China, a crucial source of supply and demand for raw materials, is playing a big role, particularly as the government tries to reduce production of key metals like steel and aluminum. It’s also buying up massive amounts of grains. Food prices are also being affected as poor weather in key growing nations like Brazil and France hits harvests.