Aluminium

BY PHIL SLINGER CAB CHIEF EXECUTIVE

Pre-pandemic on the LME ( the London Metal Exchange ) aluminium had traditionally traded on average at around $ 1,800 to $ 2,100 per tonne . At the depth of the pandemic in March 2020 the price dipped to just over $ 1,400 per tonne and since this dip the cost has steadily risen to peak in October 2021 to just under $ 3,200 per tonne . These increases have been felt further down the supply chain as prices for products have increased , but in just three weeks , ironically , since the CAB Members meeting , the price has tumbled to $ 2,500 to $ 2,700 per tonne with early investors obviously selling stock to realise a profit , question is will prices continue to tumble and will finished product fall back in price ? Uday forecasts that aluminium ’ s

LME average annual price to trade above $ 2500 per tonne for next two to three years which is some $ 600 per tonne higher than pre-pandemic prices .

Certainly with the drop back to $ 2700 per tonne , the pressure is significantly reduced for processors of finished products to review further price rises , but it is too soon to tell if the fall will remain at this level as the question remains , will this dip be viewed as a further buying opportunity ? This rapid drop could be due to investors turning their attention to ‘ green ’ stocks as COP 26 agreements bite , such as investment in the production of clean , renewable fuels . Still , aluminium demand in the short term is outstripping supply and will do for the foreseeable few years so it is quite likely that prices will not fall back to pre-pandemic prices and will remain above $ 2,500 per tonne .

China plays a big part in consumption with its huge appetite for aluminium which it also exports as aluminium products . In 2020 China ’ s aluminium exports amounted to 11 % of ROW ( rest of the world ) semis ( part produced , such as extrusion ) consumption of aluminium . For flat-rolled products this rises to 23 %. It is clear that tariffs and duties set by the USA and Europe are having little impact on total volumes exported . Low production costs in China continue to undercut production in the West , with further planned expansion of aluminium production in the region . This proposed expansion could increase China ’ s exports , although it is uncertain if several planned coal fired production plants will be built due to global pressure on cutting reliance on burning coal and the increased interest in ‘ low-carbon ’ aluminium production . Furthermore ,

the wider adoption of global carbon taxes has the potential to reduce Chinese exports .

The ‘ energy transition ’, the rapid move from carbon emitting fuels to renewables , will in fact increase the demand for aluminium amongst other metals such as Lithium . To keep to the 2 º C warming proposed limit by 2050 , aluminium supply will need to increase above the base growth , which in turn increases the need for further energy to extract and process the material . As Uday pointed out in his presentation , this is a new ‘ circularity ’ will likely increases carbon emissions in the shorter term by approximately 13 %.

One way to offset the increased production of carbon is to increase the use of secondary or recycled aluminium , however , this is in very short supply and certainly not enough scrap is available to meet current needs , whilst keeping the cost of aluminium scrap at a premium . With better design of systems and quality of finishes , aluminium products will continue to increase their ‘ in-use ’ lifespan , further reducing the availability of scrap supply . This is where CAB ’ s initiative of closing the loop of the recycling process increases the availability of quality scrap aluminium whilst ensuring a cost effective circular route for aluminium . The scheme also ensures that the UK will retain more of its scrap rather than exporting to countries such as China . CAB calls on all its members to join the scheme and work together towards lowering carbon content of aluminium used in the UK .

More information on how to

join the scheme is on the CAB

website and can be viewed

here : https :// c-a-b . org . uk /

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