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Rosy trading picture persists – despite challenges

Strong prices have been sustained as markets adjust to more normal trading arrangements as pandemic restrictions ease.

The boom in non-ferrous metal markets continues during the current reporting period. Copper has been at a high level for some time and the other metals have increased significantly in recent days. For the year-to-date, LME three-month aluminium at the time of writing is up 36.6%, second only to the remarkable 65.3% gain reported for tin. The world of commodity markets as we knew it until 2019 finally seems to be history.

External influences are currently determining our raw material prices ever faster and with full force. The range of factors – some of which are inter-linked – include:

  • political crises and unrest
  • coronavirus pandemic
  • worldwide logistical problems
  • weather and climate disasters

An example of the potential for factors to coincide is the severe storms and floods in western Europe at the end of July which damaged several German aluminium and copper processing companies so badly that they had to stop production.

HIGH PRICES SUSTAINED

Overall demand for aluminium has remained high with prices reaching their highest levels for many months. While order books remain well-filled in Europe, reports suggest the momentum on the secondary market has slowed significantly recently. This is because of increasing problems in the automotive industry, which has production bottlenecks and does not continuously purchase ordered metal.

The price surge in aluminium has concerned traders in Asia. China’s Nonferrous Metals Industry Association hosted a conference of the country’s top producers in August and labelled the increase ‘irrational’. This is seen as a coded warning from Beijing as part of its efforts to dampen what it sees as excessive commodity prices and speculation on the Shanghai market. Another related move was the sale of 70 000 tonnes of aluminium from state reserves, the third time in recent months a sell-off has happened. According to Reuters: ‘Output curbs following energy restrictions are proliferating as provincial provinces scramble to meet mandated energy efficiency targets’.

Copper prices on the London Metal Exchange has plateaued for weeks and a survey of European copper traders found that a large majority expect copper prices to remain stable for the next six months. In view of high demand, global production that is repeatedly subject to major disruptions and the good economic figures for China and some other countries, there is potential for high copper prices.

Analysts see this in a similar way but warn against expectations that are too high and say the psychologically significant limit of US$ 10 000 is unlikely to be exceeded permanently in the near future. For 2022, experts expect copper prices to experience a certain downward correction again.

ALUMINIUM

London Metal Exchange prices for aluminium have risen by a third this year to around US$ 2 650 per tonne. Prices are around 80% higher than their low in May 2020. Most recently (late August) high grade aluminium was quoted at US$ 2 655.50 and aluminium alloy at US$ 2 270. Scrap prices also rose again in the reporting period. Primary aluminium prices were lately around US$ 3 076 per tonne.

Aluminium wire scrap last cost US$ 2 590 and aluminium turnings were US$ 1 360. Extrusions scrap was valued at US$ 2 697 and new low copper aluminium alloy sheet scrap was priced at US$ 2 177. Mixed cast aluminium scrap with…

Read the full non-ferrous market analysis in our latest issue >>

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