LME aluminum price
According to LME (London Metal Exchange), the world aluminum price continued to rise sharply to reach a record of 3,600 USD / ton on 2/3/2022. Aluminum prices have hit recent record highs, such as a 12% increase in February - the biggest monthly gain since April 2018.
Since the beginning of 2022 until now, aluminum prices have increased by nearly 30%, becoming the ‘bright star’ on the base metal market. The increase in aluminum prices despite the increase in aluminum reserves on the LME shows that this market is unlikely to cool down overnight.
The reason aluminum prices are at record highs is due to supply concerns as widespread power shortages limit output in both China and Europe. The tough Western stance towards Russia over Ukraine has raised concerns about the risk of one of the world’s largest aluminum producers being punished, pushing up the price of the light metal.
The aluminum market is heavily affected by the Ukraine's complicated situation
Russia produces about 6% of the world’s aluminum and the conflict in Ukraine will affect Russia’s exports of this metal, reducing supplies, and leading to higher prices. Rising aluminum prices will affect the construction, packaging, and above all the auto sector.
The price of this metal will increase sharply if any measures are taken, in the state of extremely low reserves. However, such a move is unlikely, although rising tensions over Ukraine could push gas prices up and force more aluminum smelting plants to close.
Supply shortage in China
The energy crisis in Europe and China must allocate quotas for energy use, combined with strong demand from the sales of electric vehicles soaring. All of which has taken the aluminum market from being in surplus for many years suddenly turned into a serious shortage. Goldman Sachs Bank forecasts aluminum prices in the next 12 months will reach 4,000 USD / ton.
“We believe that the aluminum market will continue to face price increases this year, due to depleted reserves and shortages in supply in China and elsewhere,” Goldman analyst Nicholas Snowdon said.
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