In this article, we will discuss aluminum pieces drop amid multiplying European crises.
The strange tug-of-war in the aluminum industry continues. It focuses on the possible reduction in demand caused by a recession, often due to rapid interest rate hikes by central banks.
Of course, since the end of the first quarter of this year, we have all seen a sharp decline in basic metals, and aluminum is no exception. In fact, after reaching above $4,000/ton in late March, aluminum prices are now hovering between $2,350 and $2,450.
On the other hand, supply is showing signs of increasing weakness. This is even more evident in Europe, where several primary aluminum smelters and alumina refineries have been partially or completely closed due to rising electricity costs.
It is worth noting that high electricity costs usually support aluminum prices. However, recent increases in electricity costs have hurt the global aluminum market, with the market expecting further supply disruptions as electricity costs undermine smelter economics.
According to the Financial Times, electricity costs are expected to remain high until at least 2024. The group recently confirmed this prediction by mentioning the level at which consumers determine the future price of natural gas.
Russia’s war at the heart of Europe’s worries The FT Post also found that prices for gas delivered to Europe at this time each year in 2023 and 2024 are close to record highs. Currently, the forecasts are €134 and €82 per MWh. This represents a significant change from the past decade, where European gas prices have consistently traded below €40 per MWh.
Some of you may remember how natural gas prices soared last year. Much of this was due to supply constraints in Russia due to “inventory depletion” and “maintenance issues”.
In retrospect, this move was clearly a prelude to an invasion of Ukraine. Such destinations are likely to deplete Europe’s inventory levels and fuel panic in European capitals. Of course, his behavior is the same Meanwhile, Germany leads the EU in offering gas rationing to industrial users.
However, the country has faced negative reactions from players such as Spain and Portugal. These countries are less dependent on Russian gas and feel they are being asked to make sacrifices for those who have become so dependent on Moscow’s supply of cheap oil. Aluminum price, energy crisis, and European united front The United States has a significant share of the metal supply problem.
However, the resumption of production at Canadian smelters has left the Americas in a relatively stable supply situation.
In Europe, tight gas supplies and government threats of rationing remain an existential threat this winter for consumers dependent on metals pricing and supply. Indeed, European concern over gas supplies remains high, beginning to reveal the previously strong and unified response to the Ukraine war. As self-interest begins to override anger at Russia’s unprovoked attacks, disagreements begin to divide countries.
Of course, Italy’s political collapse after Draghi resigned this month was not a direct result of the conflict. However, the way the EU’s third-largest economy is responding to threats of gas rationing does not bode well for a European united front. This will be especially true if the country embraces more right-wing politics, as is expected in the next election.
Weekly highlights Key market events for the next week are right in your inbox. Subscription, subscription Aluminum ingot Will aluminum prices rise in 2022. – Photo: BildWerk/Shutterstock.com content Aluminum prices are down about 40 percent from their record highs, driven by a weak global growth outlook and a global monetary tightening cycle that is strengthening the dollar.
China is the world’s largest consumer of aluminum, and the prolonged Covid-19 lockdown has further reduced demand for the industrial metal, which is used in several industries including construction, automotive, electronics, and packaging.
Spot aluminum prices are now near $2,275 a ton, a 17-month low, five of the six months since hitting a high above $4,000 a ton in early March 2022. In the last quarter of the year, there are several factors that can affect the aluminum price forecast. Looking at aluminum price forecasts and analysis, we will discuss the following scenarios.
In its commodities report this week, Standard Chartered Bank said rising energy prices had triggered a wave of aluminum capacity cuts in Europe as smelters felt vulnerable to higher gas and electricity prices, while demand amid concerns It is weak on global growth.
European aluminum capacity reductions and reductions began last October as electricity prices began to rise. Standard Chartered noted that smelters in Spain, Slovakia, Romania, the Netherlands, Slovenia, Montenegro, Norway, and some of Germany have announced production cuts from the end of 2021.
Last week, Germany’s Neuss smelter announced a 50 percent production cut, while France’s Dunkirk, Europe’s largest smelter, cut production by 22 percent.
Aluminum prices have eased despite capacity cuts, hitting a 17-month low this week after hitting record highs in March at the start of Russia’s invasion of Ukraine. According to Standard Chartered, this reflects growing concerns about the slowdown and recovery in Chinese aluminum production, which has largely offset capacity cuts in Europe.
“Weakened demand due to slower growth, combined with higher production in China, could limit price increases in the short term,” Standard Chartered said. Due to high energy costs, the European metals industry this week called on the European Union to take urgent action to prevent the collapse of the industry, which is facing rising electricity and gas prices.
In a letter to senior EU officials, including European Commission, President Ursula von der Leyen, Eurometaux, the European metals industry association, wrote: “Business leaders in the European non-ferrous metals industry are writing together to discuss the deteriorating situation. Europe. Energy. Crisis and it’s an existential threat to our future.”
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