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COVID lockdowns in China are partly to blame for declining aluminum demand and prices, according to Bloomberg. LME Aluminum 3M fell by $438.50/mt, or 12.5% in April, making it the worst month since 2008. According to CNN calculations, 180 million people in 27 cities in China, including industrial hubs Shanghai and Beijing, are under full or partial COVID lockdowns, slowing economic activity.
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Also, a continuing semiconductor shortage and subsequent slowdown in automotive production have crippled aluminum demand, according to Bloomberg. The automotive sector represents nearly 31% of U.S. aluminum needs, according to The Aluminum Association. Automotive executives recently quoted by Newsweek believe the semiconductor shortage will last through 2023. These factors could hinder aluminum demand and prices. Consumers who are concerned about their aluminum input costs should consider financial swaps or purchasing call options. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (5/3/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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04/27/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 04/21/2022: Russian Metals Production and Related News: Most Recent Developments (AEGIS Reference) |
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| Important Headlines | ||
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5/3/2022: Stock futures fall after big market reversal to start May 5/3/2022: Aluminium maker Hydro warns of rising costs after record Q1 profit |
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| Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program.
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