January 26, 2023

Aluminum prices could hit “just shy” of $4000/mt this year due to pent-up global demand and China’s economic “reopening,” according to Goldman Sachs. AEGIS notes that this bullish view on Chinese aluminum demand comes after the country produced a record 40.21 million mt of aluminum last year. We also note that the Chinese government has recently implemented a series of real estate-related stimulus measures that will likely boost aluminum demand. Goldman’s comments were made at the S&P Global Aluminum Symposium held earlier this week. (Source: Bloomberg)

LME aluminum prices have already jumped about 10% so far this year, with the last trade on the 3M Select contract at $2,638/mt (7:00 AM CST). As Goldman suggests, rising global aluminum demand could be bullish for aluminum prices. Aluminum end-users that are concerned about increasing prices could consider buying swaps or call options, as either would establish a maximum aluminum price. Such positions are standard for consumer hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (1/26/2023)

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Price Indications

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