A 100 USD/MT Rise in the LME Aluminium Price on Monday
09-19
The significant jump of 100 USD/MT in the LME aluminium price on this Monday, Sep. 16th, is notable but not unprecedented. Historically, such large movements have occurred during periods of market volatility driven by factors like supply disruptions, regulatory changes, and geopolitical tensions.
For instance, in 2021 and early 2022, aluminium prices experienced sharp fluctuations due to supply chain disruptions caused by the COVID-19 pandemic, coupled with increased demand from the renewable energy and electric vehicle sectors. Similarly, energy crises, such as the one in Europe due to rising natural gas prices, have caused major spikes in aluminium prices, as energy is a key cost driver for aluminium production.
In the past, after such sharp increases, prices have often corrected slightly or plateaued as market participants adjusted to the new conditions. However, in the medium term, prices tend to remain elevated if supply constraints persist. For example, factors like Chinese production cuts due to environmental regulations and export limits have kept the market tight in recent years, often sustaining price gains over several months.
Going forward, the market will likely keep an eye on key drivers such as energy costs, China’s export policies, and broader economic conditions. Continued tight supply and potential shifts in demand from sectors like automotive and construction could either reinforce or moderate the price trajectory.
1. Rising Energy Costs:
Aluminium production is energy-intensive, and the recent spike in global energy prices, particularly natural gas and electricity, has significantly increased production costs. Europe, in particular, has been affected by energy shortages, which have constrained production and pushed prices higher.
2. Tight Supply:
Production cuts in major aluminium-producing countries, especially China, have created supply shortages. China's environmental policies and emissions reduction targets have led to curbs on aluminium smelting. Additionally, temporary disruptions, such as flooding in Henan, China, have reduced supply.
3. Increased Demand:
Demand for aluminium has surged due to the global economic recovery and growth in key industries like automotive, renewable energy, and construction. The electric vehicle sector, in particular, is a significant driver of aluminium demand, as lightweight materials are critical for energy efficiency.
4. Investor Activity:
Aluminium has attracted attention from investors as a commodity seen as undervalued, leading to fund buying. This speculative activity has added momentum to the price rise.
These factors combined have driven a sharp increase in aluminium prices, with potential for continued price strength if supply constraints persist and demand remains strong.
【https://news.metal.com/newscontent/100773960/analysis-why-is-lme-aluminium-price-rising/】
【https://www.focus-economics.com/commodities/base-metals/aluminium/】