Steady as She Goes
March 2019
The slight lift in prices over the month is driven by continued draw down in stocks and potential disruption to Norsk Hydro’s production following a cyber-attack. Overall prices traded in a band of US$1826-1912/t. A slight price spike occurred in the middle of the month, reaching a 2019 high, following a cyber-attack on Norsk Hydro’s operations systems amid fears over a potential production shortage.

Also, in March it was also speculated that an end to the US’s tariffs on aluminium products from Canada and Mexico may be removed soon as part of finalisation and ratification of the NAFTA replacing USMCA. Concerns remain over the potential replacement of the tariffs with quotas.

LME aluminium stocks continued February’s downward trend, falling ~103kt to close the month at ~1.1Mt. The visible stock cover of LME warehouses is 6.1 days. SHFE aluminium deliverable stocks also declined posting a ~12kt drawdown in March to close at 0.74Mt. The continued de-stocking indicates a market deficit. This gradual decline in visible stocks is believed to be a contributor to the gradually increasing metal price. 

Aluminium prices have slowly continued to rise through March, reaching a 2019 peak at US$1912/t (US86.7¢/lb) before retreating slightly. Over the month the price was up 0.6% to finish at US$1,897/t (US86.0¢/lb). The full-month aluminium price averaged US$1,872/t an increase of 0.6% month on month.

The global alumina price averaged US$398/t and finished the month just over US$400/t. Alunorte remains curtailed, agreement has been reached between Norsk Hydro and Brazilian authorities that lifting of the production embargo will not be challenged should a third party technical assessment determine full production can be safely resumed. The eventual return of supply may see a softening in alumina prices. In India, Odisha’s high court has ordered state-owned Nalco, which operates an alumina surplus to permit fellow Indian private aluminium producer, Vedanta, to participate in tenders to purchase surplus material. Historically, Nalco has exported all surplus alumina, refusing to sell to domestic competitors.

Cyclone Trevor passed over Cape York in Queensland, Australia in late March forcing a temporarily halt to bauxite mining operations at Rio Tinto’s Weipa mine. Operations have recommenced, but Rio Tinto have not specified any major impact to production. Despite the bauxite mining moratorium in Malaysia expiring at the end of March, the government has declared it is unlikely to issue permits in time for mining to begin immediately upon lifting of the ban. The more stringent environmental compliance requirements are expected to see export volumes lower than prior to implementation of the ban once mining recommences.