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September 13, 2021 – Aluminum prices at highest level since 2008 due to supply snags. Chinese export tax rebate cuts on aluminum back in play? EC only throws a bone wrapped in waste paper with proposal to suspend anti-dumping duties for 9 months. Steel and stainless steel demand picks up. German machine tool builders with strong order intake.

Stainless Espresso: Aluminum prices shoot up sharply due to supply snags
Stainless Espresso: Aluminum prices shoot up sharply due to supply snags

Supply bottlenecks: aluminum prices at highest level since 2008

Aluminum futures reached their highest level since 2008 on the LME on Monday morning and were already at $2,973 per ton. On the SHFE, aluminum was up more than 4.4% by the close of trading.

Source: lme.com, shfe.com.cn

Aluminum supply tight at least until the end of 2022?

The industry believes that the dislocation in aluminum supply has just begun and will continue at least through 2022. That was noted over the weekend at the Harbor Aluminum Summit, the largest North American aluminum conference. Some conference attendees even said it could take as long as five years to resolve the problems in the aluminum market.

Several causes of the current crisis

Production cuts in China, troubled global supply chains, Covid19 outbreaks, staffing problems with trained workers and truck drivers, and extremely high demand for aluminum are cited as the main causes of the aluminum crisis.

“Consumers are ordering more than 100% of their expected needs,” Adam Jackson, the director of metals trading at Aegis Hedging, said in an interview. “They don’t expect to receive 100%, but if they over-order, maybe they’ll land on the right amount and not forfeit sales.”

Cuts in Chinese aluminum export tax rebates?

The first rumors are already circulating that China wants to cut export tax rebates for aluminum. We have learned from a reliable source that Chinese aluminum producers are already including a reference to a possible upcoming tax change in their offers, similar to what has happened with steel. This involves a rebate reduction of 10 to 12%.

All just waste paper? EC wants to suspend aluminum tariffs for 9 months

If we look at the European Commission’s (EC) thoughts on a possible suspension of anti-dumping duties for 9 months on some Chinese aluminum imports in the overall context of the current situation, the EC’s proposal looks like pure waste paper and a thrown bone.

Steel and stainless steel prices stable to rising

The rebounding demand for steel and stainless steel, a major mining accident in China, and that a major Asian stainless steel mill has raised prices by $100 per ton for September 2021 indicate that steel and stainless steel prices will remain stable to rising.

The voices of those who wanted to talk prices down in the summer slump, for whatever reason, should soon be silenced.

German machine tool builders continue to make strong gains

High domestic demand, but also a strong increase in foreign demand – primarily from China – have caused order intake in the German machine tool industry to rise significantly in the second quarter of 2021.

Very good foreign demand among tool manufacturers

In the second quarter of 2021, order intake in the German machine tool industry increased by 103 percent compared to the same period of the previous year. Domestic orders increased by 81 percent. Foreign orders were 114 percent up on the previous year. In the first half of 2021, orders from German suppliers rose by 57 percent. Domestic orders were 38 percent up on the previous year, while foreign orders were 68 percent higher. This is according to figures from the German Machine Tool Manufacturers Association VDW.

Recovery of the global economy despite bottlenecks

“Without the bottlenecks and price increases in supplies, e.g. electronics, steel, sheet metal, there would be even more to come,” Schäfer sums up. Against the background of an intact recovery of the global economy, however, a further increase is expected. The VDW is currently forecasting an 8% increase in production in 2021 and an order volume of €13.2 billion.

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