Japan: Aluminium prices fluctuate amid expected demand recovery

• Aluminium demand in major countries forecasted to recover slowly
  
  
• Russian aluminium prices are influenced by sanctions, market dynamics
  
  

Sumitomo's report overview:

Sumitomo Corporation's Light Metals Unit Bullion Team has released a report called "Retrospective and Outlook", reviewing the aluminium market for 2024 and providing future predictions. The report suggests that aluminium demand in major countries will not recover until next year or later.

Impact of sanctions on Russian aluminium:

The report also examines the impact of recent Western sanctions on Russian aluminium, imposed this spring. These sanctions, combined with the ongoing conflict in Ukraine, have created significant price risks for aluminium.

Economic dynamics in China, the US:

In China, demand growth is sluggish, delaying economic recovery. While car sales are picking up, the construction sector remains stagnant. However, this decline in construction activity is expected to be balanced by growth in automobile sales and the expanding renewable energy sector, particularly solar power.

In the United States, the anticipated delay in policy interest rate cuts could slow down the pace of economic recovery or growth.

Factors influencing global prices of Russian aluminium:

The price of Russian aluminium on the global market could fluctuate due to several factors. If more sanctions are imposed on Russia or if it's excluded from major trading platforms like the LME, the price of Russian aluminium might rise due to restricted availability. Conversely, if a large amount of Russian aluminium enters the Chinese market, prices could drop due to increased supply compared to demand.

For example, China's imports of Russian aluminium ingots have significantly increased to 53% as of April, up from 14% in 2017. This influx could influence global aluminium prices, depending on supply and demand dynamics in China and beyond.

Limited impact of LME ban:

The LME ban in April, resulting from additional Western sanctions against Russia, didn't significantly impact the market. Despite these sanctions and the ban, the overall effect on the price and availability of Russian aluminium was limited. Increased imports by countries like China may have mitigated the impact of the LME ban.

Futures price prediction:

The report predicts that the LME 3-month futures price for aluminium will range between $2,300/t and $2,800/t from July onward. Despite a delayed recovery in demand, production cuts in China's Yunnan province due to drought, and high energy and shipping costs from Middle Eastern tensions are expected to prevent prices from falling too much.

Additionally, speculative investment funds could cause significant price fluctuations based on market trends.

This article has been published under an agreement between BigMint and Japan Metal Daily.