Alcoa sees positive sentiment for global aluminum prices and regional premiums supported by bullish demand trends in addition, but not solely due, to recent moves by the US and UK to prohibit the trading of Russian-produced aluminum, CEO William Oplinger said April 17.
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"I would not attribute all of the price moves recently to these Russian sanctions," he added. "We are seeing strong demand across the board... in just about every industry and every region that we serve with the exception of European building and construction."
The US and UK issued new prohibitions April 12 that would prevent metal exchanges in the countries, such as the LME and the Chicago Mercantile Exchange, from accepting new aluminum, copper and nickel produced by Russia after April 12. The US also banned the import of Russian-origin aluminum, copper, and nickel produced after April 12. The actions are the most recent from the US and UK involving the metals sectors in retaliation for Russia's ongoing war with Ukraine.
Oplinger said Alcoa was supportive of the moves, as it has long argued that continued consumer boycotts of Russian aluminum would cause the metal to sit in LME warehouses and depress prices.
"The [LME] index price for all metal sales had been set by Russian units, which we believe were discounted in the marketplace, and so you had a global pricing mechanism that has lost its credibility because it was based on a product that wasn't widely accepted in the market," he said.
The recent bans on Russian metal "reestablishes the credibility of the [LME] benchmark price," Oplinger said, adding that he expects the EU to enforce similar bans against Russian aluminum following the moves from the US and the UK.
Price movements
The LME three-month aluminum price has been on an uptrend since February, closing at its highest point in over a year on April 16 at $2,561.50/mt.
Regional premiums assessed by S&P Global Commodity Insights have also been on the rise in the weeks before the announced bans on Russian aluminum.
The Platts Aluminum P1020 Transaction Premium delivered US Midwest was assessed at 19.1 cents/lb April 17, rising from a year-to-date low of 17.45 cents assessed from Feb. 16 to March 14.
Platts assessed the CIF Main Japanese Ports spot premium for 99.7% P1020/P1020A aluminum ingot at $142/mt April 17, continuing a constant upward trend since the beginning of the year when it was assessed at $77/mt.
The Platts Daily Aluminum Duty Paid In-Warehouse Rotterdam Premium was assessed at $290-$310/mt April 17, with a midpoint of $300/mt. The premium has also mostly risen since a year-to-date low of $255/mt in early February.
The Pittsburgh-based Alcoa reported a net loss of $307 million on sales of $2.6 billion in the first quarter, down from a net loss of $232 million on sales of $2.67 billion in Q1 2023.