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Stainless Espresso: Aluminium prices at record high due to supply concerns
Stainless Espresso: Aluminium prices at record high due to supply concerns

22 February 2022 – Aluminium prices rose today to their highest level in more than 25 years due to political tensions, high demand, low inventories and production problems. In China, mortgage rates are falling, which is expected to fuel the construction boom. In addition to aluminium prices, nickel is also rising sharply today.

China fuels construction boom – mortgage rates fall significantly

The Chinese government had announced that it would give a major boost to the construction sector, which is so important for steel and stainless steel. After the Chinese New Year and the Winter Olympics, these are now becoming visible. According to a recent survey by the Beike Research Institute, mortgage rates have been cut by up to 5 basis points.

This should make investing in a home much more interesting for Chinese home buyers. And provide important stimulus and capital to the construction industry.

Aluminium prices jump to record high

Aluminium prices have reached an all-time high and currently stand at more than $3,400 per tonne on the LME. Not only the current political developments have their share in this, but also the general demand for the light metal is high. Analysts had already predicted a possible price increase to up to $4,000 per tonne a few days ago.

Production problems and extremely low stocks

Add to this the news that a major aluminium smelter of a European group has to cut production by at least 25% and that available LME volumes of aluminium have fallen by more than 66% in just a few days. The significant drop in available lots can also be seen in LME nickel volumes. In the same period they have fallen by more than 35%.

Aluminium and nickel jump due to political tensions

Aluminium and nickel futures on the LME jumped at the start of trading today due to the current political tensions in the conflict between Russia and Ukraine. Aluminium was up more than 3.2%. For nickel, it was up more than 3.4%. Earlier, on the Asian SHFE, long-term aluminium futures had already risen by almost 2.2%. Long-term SHFE nickel futures are also up significantly by more than 3.2%.

Are sanctions against Russia on the way?

After yesterday’s events in Russia and Ukraine, the first sanctions against Russia by the European Union and the United States are expected today. In view of the significant price increase in long-term futures contracts, the market seems to assume that the sanctions against Russia will restrict the availability of important raw materials. It seems to be recommended to adjust sourcing strategies in a timely manner.

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