August 30, 2021 – Chinese aluminum manufacturers have to look for new energy sources. Aluminum prices at 15 year high. Fed to pursue market-friendly quantitative easing. Nickel and stainless steel are rising sharply. Shortage: Stainless steel prices in Europe continue to rise.
Chinese aluminum smelters face new challenges
Chinese aluminum smelters, just like steel producers there, are facing major challenges in the course of CO2 reduction. Now, already suffering from a shortage of electricity, aluminum producers must also look for new alternative energy sources.
Aluminum producers are no longer allowed to be favored
While Europe is not really making progress with the green transformation, the Chinese government last week once again created facts on the way to CO2 neutrality. Aluminum manufacturers may no longer be given preferential treatment in the prices for energy from hydropower.
Energy price advantages expressly prohibited
Such price advantages were expressly prohibited by the National Development and Reform Commission (NDRC). This is to encourage aluminum smelters to switch to non-aquatic energy sources, such as wind or solar, according to NDRC.
Aluminum prices jump to 15-year high
Aluminum futures on the SHFE jumped more than 3.9% Monday morning and are at a 15-year high above $3,320 per ton. The backdrop is concerns about the overall availability of aluminum after another Chinese province, in addition to overall energy price changes, has aluminum output significantly reduced.
On the LME, aluminum futures are currently at around $2,653 per ton, the highest level since 2011.
Aluminum smelters in Xinjiang must cut output by up to 30%
Xinjiang province on Friday also called on several aluminum smelters to cut output by up to 30% in the coming months.
Xinjiang is a major smelting hub in China, accounting for almost one-fifth of supply in the world’s biggest producer and consumer of aluminum.
Fed to tighten monetary policy moderately and in a market-friendly manner
As we expected last week, Fed Chair Jerome H. Powell announced at the Jackson Hole meeting that a reduction in quantitative easing (QE) may be appropriate in 2021. But that there is no rush to raise interest rates. The speech indicated that the Fed will tighten monetary policy in a moderate and market-friendly manner, which largely eased market concerns.
Commodity stocks rise sharply in some cases
In response to the Powell announcement, commodity markets reacted, in some cases significantly.
Nickel on SHFE up over 4.5%
Nickel futures on the SHFE rose by over 4.5% in the wake of the Fed announcement and are currently at more than $ 22,760 per ton. On the LME, nickel contracts are up over 1% or stand at more than $19,000 per ton.
US labor market data on September 3
On Friday, September 3, 2021, the new US labor market data are expected. Experience shows that the outlook here will have further influence on the general market situation on the commodity exchanges.
Stainless steel futures move up by approx. 3.8%
Stainless steel futures on the SHFE follow the rise of nickel and go up by up to 3.8%. Added to this are general concerns about the overall availability of stainless steel.
Aluminum prices rise on supply fears
Aluminum rallied more than 3.9% on the SHFE on Monday, as previously reported, and the LME followed with more than 1.2%. This puts aluminum values at their highest levels since 2006 (SHFE) and 2011 (LME).
Stainless steel in Europe still in short supply, prices up
SStainless steel prices in Europe rose again last week, continuing their upward trend. Developments on the Asian markets, especially in China, also indicate that no major changes in the tight supply situation and prices are expected here in the further term.
Stainless steel and EV batteries face increasing competition for nickel
With the rise of electromobility, stainless steel and vehicle batteries are in an increasingly competitive situation on the market, which has the potential to influence prices. The first nickel producers are already switching from the “cheaper” stainless steel nickel to the “higher-quality” battery nickel products, thus shifting the supply situation.
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