MetalMiner’s monthly aluminum price index, the Aluminum MMI®, fell to 87 in March, a decrease of 2.2% from 89 in February. Aluminum price drops nearly across the board – namely the LME aluminum 3-month price, which fell to its lowest since April 2014 – accounted for the latest hit:
However, even this aluminum fall is minimal compared to the losses of our other metals.
LME Aluminum Warehouse Rules
The London Metal Exchange (LME) keeps moving forward with reform of its warehouse rules. As my colleague Stuart recently explained in a post, a definition on what load-out means has been accepted. Now metal cannot be merry-go-rounded within the same facility and by the same owner.
The long-awaited aluminum premium contract will be launched on October 26. We will have to wait to see how this impacts delivery premiums.
On the production side, non-Chinese aluminum production was unchanged in January, according to the latest figures from the International Aluminum Institute (IAI). Producers are still holding aluminum capacity line in terms of keeping smelters offline in the face of low prices and historical stock overhang.
The IAI was also in the news early last month because it stopped production of its monthly producer inventory figures, saying its own members are either not submitting the data at all or struggling to do so on a timely basis.
Let’s Dance: IAI Data and LME Aluminum 3-Month Price
How that affects the aluminum price is an entirely different issue. The 3-month aluminum price on the LME fell slightly last month but aluminum is still above the lows of 2014 and definitely performing better than most base metals. It’s just one move out of many that have made aluminum the murkiest and most difficult to read of the metal markets we track with the Monthly MMI series. The IAI certainly can’t be faulted for not passing along what we all have known for some time is incomplete data. It should fall on producers to be more forthcoming and provided greater transparency.
We believe that the direction that aluminum takes from now will strongly depend on crude oil. Has oil found a floor? It’s hard to tell yet, but if hasn’t, another move to the downside will likely have a depressing effect on the rest of commodities and aluminum would likely suffer as well.