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.
