May 9, 2022

China rarely exports alumina; however, anonymous traders cited by Bloomberg believe the country will export 200,000 mt in April and May, with most going to Russia. Russia’s aluminum producer, Rusal, has lost approximately 40% of its normal alumina supplies due to logistical issues from the Ukrainian conflict and Western sanctions. Prior to the conflict, Rusal obtained most of its alumina from Ukraine and Australia. Shipments of alumina from China to Russia began in late March when exporters sent several test cargoes. At that time, anonymous traders quoted by Bloomberg stated those initial shipments were to test “whether the cargoes face any logistics issues or problems with sanctions, with more ready to ship if all goes well.” With this morning’s negative trade (7:15AM CST), LME Aluminum prices are now down year-to-date.

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. (5/9/2022)

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