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As of February 28, LME aluminum warehouse stocks nearly doubled to 439,750 mt from the end of January total of 231,125 mt. AEGIS notes that this has contributed to downward pressure on prices, which are lower by approximately 9% since February 1. Even though aluminum prices have tumbled in the past month, they are still roughly flat on the year. Aluminum end-users can hedge nearly at the same prices as seen in early January. |
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This significant increase in stocks stems from two regions, Russia, and India. Russian-origin aluminum stocks were 200,600 mt as of February 28, over double the 93,600 mt that were in LME warehouses at the end of January. According to Bloomberg and Reuters reports, traders such as Glencore and others have been offloading large volumes of Russian-origin aluminum onto the exchange since last fall. Most of these volumes are going into South Korean warehouses, which are well-known depositories for Russian aluminum. The other major portion of this increase in stocks was the 122,050 mt of Indian-origin aluminum, most of which flowed into Malaysian warehouses. (Sources: Bloomberg, Reuters, LME) If you don’t currently have a hedging program in place, AEGIS can provide consultation. Most of AEGIS’s aluminum clients use traditional hedging methods, such as LME swaps or call options. Simplicity is the key. Please give us a call for more information and potential strategies. (3/14/2023) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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AEGIS Insights |
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03/08/2023: AEGIS Factor Matrices: Most important variables affecting metals prices 02/24/2023: European Aluminum Smelters Improve, But Not Enough To Entice More Production 02/07/2023: Will Aluminum's Rally Continue? 01/24/2023: Peruvian Protests Could Support Copper Prices 01/11/2023: Nickel Prices Could Remain Volatile Into 2023 |
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3/13/2023: Molybdenum Oxide Daily Dealer futures contract launches on CME 3/13/2023: India to auction newly found lithium reserve 3/11/2023: Panama gives Canada's First Quantum go-ahead to operate port terminal 3/10/2023: Canada bans Russian aluminum, steel imports 3/10/2023: Panama minister expects contract with First Quantum will get green light 3/9/2023: Germany's Speira to end Rheinwerk aluminium smelting due to energy costs 3/9/2023: Peru mining firms' logistics at risk from extended protests, Fitch says |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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