No upside to aluminium until trade war calms: Sucden
The outlook for aluminium prices on the London Metal Exchange (LME) in the fourth quarter is bleak and will not improve unless there is a marked improvement, not just in the market's fundamental aspects of demand and supply, but also in the progression towards resolving the US-China trade dispute, Sucden Financial's head of research, Geordie Wilkes, said.
"There isn't much on the upside," Wilkes said of the light metal's immediate prospects. "There is a strong fundamental case of a significant deficit, but end-user demand remains weak."
Even an aluminium deficit of about 800,000t could be easily covered by new Chinese capacity, and the market will need to see big deficits for years before existing stocks are drawn down to the point where supply flows are threatened, Wilkes said.
Sucden's forecast for aluminium prices through the fourth quarter of 2019 is $1,618-1,950/t, with little prospect of moving beyond that range any time soon. The three-month aluminium contract on the LME settled at $1,717/t in today's official session.
To see aluminium prices rise beyond Sucden's forecast range would require a significant improvement in international trade relations, and that is something the industry cannot achieve on its own.
"If we were to see a resolution, or just progress in the trade war, that could lead to a relief rally," Wilkes said.
Wilkes pointed to the slowdown in the Chinese property market, where the People's Bank of China is unlikely to further support an already well-leveraged market in which debt and prices have been climbing swiftly.
And the automotive market is weak all over the world, although Wilkes highlighted the bright spot of US light vehicle demand, which helped aluminium sheet shipments to the US grow by one-fifth year on year in July. But with the rise of ride-sharing initiatives, it is unlikely that the automotive market will return to its former strength. There are about 66mn ride-sharing application users in the US and about 460mn in China.
Related news posts
Hydro invests in metal recycling plant at Hoyanger
Hydro invests in metal recycling plant at Hoyanger
London, 22 April (Argus) — Norwegian aluminium producer Hydro has invested 240mn kroner ($21.8mn) in a new recycling facility alongside its primary aluminium smelter in Hoyanger, Norway. The recycling plant will process 36,000 t/yr of post-consumer aluminium scrap, as Hydro moves towards its 2030 target of reducing its emissions by 30pc compared with 2018 levels. The new facility will process scrap metal from vehicles, building facades, furniture, packaging and other consumer goods, which will be mixed with primary metal made with renewable hydropower at the Hoyanger plant. Among Hydro's low-carbon aluminium products is the Circal brand of aluminium, which is made with 75pc recycled content, and the Reduxa brand, which is made with renewable energy and generates emissions of less than 4kg CO2/kg aluminium produced. They are key to the company's emission reduction targets and ultimately reaching net zero by 2050. "Recycling is the fastest way to zero. With this new facility, we deliver on our strategy to increase recycling capacity in our efforts to decarbonise our own production processes and make products that the world needs for the green transition," the executive vice-president of Hydro's aluminium metal business, Eivind Kallevik, said. By Jethro Wookey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Baltimore opens third temporary shipping channel
Baltimore opens third temporary shipping channel
New York, 22 April (Argus) — A third temporary shipping channel has opened at the Port of Baltimore to allow more vessel traffic around the collapsed Francis Scott Key Bridge. Located on the northeast side of the main channel, the new passage has a controlling depth of 20-ft, a 300-ft horizontal clearance, and a vertical clearance of 135-ft. When combined with two other temporary channels opened earlier this month the port should be able to handle "... approximately 15 percent of pre-collapse commercial activity," said David O'Connell, the federal on-scene coordinator. The main shipping channel of the Port of Baltimore — a key conduit for US vehicle imports and coal exports — is expected to be reopened by the end of May, the Maryland Port Administration said earlier this month. The bridge collapsed into the water late last month when the 116,851dwt container ship Dali lost power and crashed into one of its support columns. Salvage teams have been working ever since to remove debris from the water and containers from the ship in order to clear the main channel. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China's Lopal starts first Indonesian LFP battery plant
China's Lopal starts first Indonesian LFP battery plant
Beijing, 22 April (Argus) — Major Chinese lithium iron phosphate (LFP) producer Jiangsu Lopal Tech has launched production at the first phase of its Indonesia-based LFP production plant. The Indonesian plant is the first overseas LFP battery material production project with over 10,000 t/yr capacity that a Chinese company has invested in, Lopal said. Lopal's subsidiary Changzhou Liyuan New Energy Technology started building the first phase of the project in July last year, with a 30,000 t/yr output capacity for LFP battery material. The line started pilot production in March. The plant is located in the Kendal Industrial Park in Indonesia's Central Java province. The whole project has a designed capacity of 120,000 t/yr, with the second phase of 90,000 t/yr likely to start construction in the second half of this year. This project marks a milestone in China's investment in overseas battery feedstock resources, according to market participants. Most Indonesian projects that Chinese firms invest in are for primary materials or intermediates such as lithium salts, graphite, nickel matte, mixed hydroxide precipitate (MHP) and ferro-nickel including nickel pig iron. Lopal has been accelerating its investment in lithium-ion battery material production in the past few years. It is also building a 50,000 t/yr production line for LFP and a 100,000 t/yr plant for iron phosphate in the Shandong Heze Juancheng industrial park, in which another 80,000 t/yr iron phosphate project is located. Changzhou Liyuan on 18 April released its newly-developed 4th generation high compaction LFP cathode material S501, with 2.65g/cm³ of compaction. This has increased the battery's energy density and power load, said the company. LFP has taken up a bigger market share in the power battery market because of its lower manufacturing costs and safer performance. But one of its main disadvantages is shorter driving ranges on electric vehicles because of lower energy density. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
International Graphite gets Western Australia funding
International Graphite gets Western Australia funding
Singapore, 22 April (Argus) — Australia's International Graphite will receive fresh funding of A$6.5mn ($4.2mn) for its graphite project and plans in Western Australia's (WA) Collie from the state government. The Labor party-led government of premier Roger Cook will provide A$4.5mn to support the acceleration of International Graphite's pilot graphite micronising plant in Collie to "full scale", with A$2mn for its battery anode material facility feasibility study, the WA government said on 20 April. International Graphite in February wet commissioned its 200 t/yr graphite micronising plant, having obtained government approval for equipment installation late last year. The facility is a precursor to its planned 4,000 t/yr commercial micronising facility in Collie, which is expected to cost A$12.5mn and could begin construction by mid-2024, the firm said. It plans to build the operations over 18-24 months, the WA government said. The company last year signed an exclusive agreement for a lease related to its Collie graphite battery anode material facility. It is aiming to be the first fully integrated battery anode graphite processing firm in WA. International Graphite owns the Springdale graphite deposit near Hopetoun in WA, the second-largest known graphite deposit in the country. The deposit has a mineral resource estimate of 49.3mn t of 6.5pc total graphitic carbon, according to the firm on 12 September. The Australian federal government last year gave A$4.7mn to International Graphite through its Critical Minerals Development Programme grants. It received the first and second tranche of A$1.7mn and A$1.25mn last year. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more