SHANGHAI, Mar 2 (SMM) - With the ongoing Russia and Ukraine conflicts and the international community's escalating sanctions against Russia, LME aluminium rose for several days in a row and even recorded a gain of nearly 5% amid heightening supply concerns. Although the contract lose some of its momentum, it is still rising relatively rapidly. As of 16:43 Beijing time, LME aluminium rose 1.35% to $3,535/mt, and SHFE aluminium also maintained intraday gain of 1.35% and closed at 22,955 yuan/mt.
Back to the spot market in China, SMMA00 aluminium was offered at 22,850 yuan/mt, up 300 yuan/mt from the previous day. The spot premiums in south China continued to be weak, and the traders shipped actively. SMM spot discounts in Foshan stood at 80 yuan/mt over SHFE 2203, down 10 yuan/mt from yesterday, and the average spot price was 22,840 yuan/mt, up 290 yuan/mt from a day ago. The actual transactions were made at discounts of 30-20 yuan/mt over SMM prices. The discounts in south China expanded as a whole, attracting some downstream buyers. The premiums/discounts in east China were relatively stable, and the spread between Guangdong and Shanghai fell to the negative zone amid narrowing discounts in south China.
This follows Russia's announcement to temporarily shut down production of an alumina refinery in the Nikolaev region of Ukraine, and to suspend the exports of its alumina. There are also indications that Rusal may transfer alumina from its Aughinish refinery in Ireland and supply it to its smelters in Russia. Rusal, a Russian aluminium smelter, possesses a refining capacity of the 1.7 million mt in Ukraine and 2 million mt in Ireland.
Alcoa (AA.US) Chief Executive Roy Harvey said on Tuesday that the company has no plans to increase their capacity by building new aluminium smelters. He reiterated that Alcoa would only use Elysis technology to build low-emissions plants.
Harvey also said that Alcoa would not invest in conventional technologies, either for expansion or new capacity.
Harvey's comments came to the attention of the market as aluminium prices soared to a record high on Monday, with the Russian-Ukrainian conflicts fuelling a continuing shortage of global aluminium supplies. Aluminium is an industrial metal used in the production of products such as cars, aircraft, household appliances and packaging. Century Aluminum (CENX.US), the second-largest aluminium producer in the United States, reserved the possibility of increasing production capacity.
Elysis, a joint venture between Alcoa and Rio Tinto (RIO.US), is said to have developed a technology for producing aluminium that does not emit carbon dioxide. Alcoa has said it expects the technology project to achieve commercial mass production within a few years, and promised last November that any new plant would use this technology.
The global aluminium market saw a shortage of 1.9 million mt last year, according to the World Bureau of Metal Statistics (WBMS). Buoyed by higher aluminium prices, Alcoa rose nearly 6% and Century Aluminum rose nearly 12% by the close on March 1.
