Base Metals Dashboard - Week Ending November 8, 2024

Aluminum

Base metals along with other commodities weakened this week as China's $1.4 trillion debt refinancing plan underwhelmed investors, failing to deliver new stimulus. While there had been initial optimism for additional economic support, the plan focused solely on refinancing local government debt through 2028 without addressing broader growth challenges. The strong U.S. dollar, fueled by Donald Trump's election victory, further pressured commodity prices, including copper, zinc, aluminum, and nickel. Investors are now awaiting clearer signals of a recovery in China's economy amid trade uncertainties. (Bloomberg)

Alcoa has declared force majeure on bauxite supplies from its Juruti mine in Brazil due to a stranded vessel blocking the channel near the port, a disruption that could further tighten global alumina supplies as production struggles worldwide. This issue impacts supply to the Alumar refinery, where Alcoa has a significant stake, and comes as alumina prices have surged to multi-year highs, with Australian alumina at $723/mt on Nov 7, up $373/mt since the start of this year and the highest level since Platts started the assessment in August 2010. With supply disruptions in Guinea, Australia, and high demand from China, the outlook remains tight for alumina buyers. (Bloomberg)
US tariffs on Chinese aluminum, currently at 25%, may increase under Trump, yet the impact on China’s major producers like Chalco and Hongqiao is expected to be minimal due to their limited export volume to the US. Since anti-dumping measures began in 2016, Chinese aluminum exports to the US have fallen by over 65%, now representing only 4.5% of China’s total exports. After a 10% tariff was introduced in 2018, some Chinese companies, such as Innovation New Material Technology, began planning production in Mexico to leverage the US-Canada-Mexico trade agreement for better market access. (Bloomberg)

Copper

Copper prices fell below $9,500 per ton this week after China’s $1.4 trillion debt refinancing plan disappointed investors, failing to deliver new stimulus measures. While the plan aimed to ease local government debt through 2028, it did not provide the additional economic support many had hoped for. The stronger U.S. dollar, driven by Donald Trump’s election, further pressured commodities, including copper, which dropped along with other metals like zinc, aluminum, and nickel. Traders are now awaiting clearer signs of recovery in China’s economy, which has been struggling recently amid global trade uncertainties.. (Bloomberg)

Other Important LME and CME Metals & Markets

Nippon Steel remains optimistic that its $14.1 billion acquisition of U.S. Steel will close by year-end despite strong resistance from unions, the outgoing Biden administration, and President-elect Trump, who has pledged to block the deal. Vice Chairman Takahiro Mori expressed hope for “constructive discussions” now that the election has concluded, emphasizing the acquisition’s benefits to the U.S. economy, competitiveness with China’s steel giants, and plans for a $1.3 billion investment in U.S. Steel’s operations. With recent permissions from U.S. regulators to refile the bid, Nippon Steel is making efforts, including meeting with unions and divesting its stake in an Alabama mill to ease antitrust concerns.(Bloomberg)
Hot-rolled steel prices have historically increased after U.S. presidential elections, with notable gains observed in the last three cycles as businesses seek clarity on policies around industrial investment, trade, and tariffs. Prices surged nearly 66% in Q4 2020, with 40% of that gain after the election, while Q4 2016 saw a 20% post-election rise, and Q4 2012 registered a 5.8% increase. Analysts see positive prospects for steel regardless of the 2024 election outcome, as Harris would likely emphasize green manufacturing, while Trump would aim to bolster U.S.-based production.(Bloomberg)

LME Aluminum

LME Aluminum 3M settled at $2,652/mt, down $9.50/mt on the week.

Aluminum prices were down this week. The futures forward curve remains in a contango, meaning nearby prices are lower than forward prices. Aluminum consumers concerned about increasing prices might consider hedging future needs by buying swaps or call options. Depending on risk tolerance, end-users might consider strategies that use only swaps or options or a combination of both. The aluminum market has sufficient liquidity to use swaps and options. Please get in touch with AEGIS for specific strategies that fit your operations.

Midwest Premium

Prompt month CME MWP last traded/settled at 19.7¢/lb this week.

The CME Midwest Premium market is now in a contango from the November‘24 contract on forward. The CME Midwest Premium swap market is thinly traded, with no options market. Hedging in this thinly traded market is challenging, so we recommend using limit orders. Please get in touch with AEGIS for specific strategies that fit your operations.

* Please note all these charts are for desktop only. *

LME Copper

LME Copper 3M settled at $10,040/mt, down 284/mt on the week.

Compared to last Friday, LME Copper's forward curve has shifted vertically lower and is in contango throughout 2024 and early 2025. The copper market has sufficient liquidity to use swaps and options. Depending on their risk tolerance, consumers might consider strategies that use only swaps, options, or a combination of both. Please get in touch with AEGIS for specific strategies that fit your operations.

LME Nickel

LME Nickel 3M settled at $19,710/mt, down $540/mt on the week.

As prices were down this week, nickel’s forward curve also modestly shifted lower. It remains in a steep contango, meaning that nearby prices are lower than futures prices. The nickel market has sufficient liquidity to use swaps and options. Depending upon your risk tolerance, consumers might consider strategies that use only swaps or options or a combination of both. Please get in touch with AEGIS for specific strategies that fit your operations.