LME Aluminium Jumped Over 4% on Low Inventory and Australian Sanctions on Russia

SHANGHAI, Mar 21 (SMM) - Boosted by Australia’s announcement yesterday that it would immediately ban the export of alumina and bauxite to Russia, LME aluminium moved all the way up today, and rose by 4.69% to $3,539.5/mt as of CST 11:30. SHFE aluminium also gained 2.21% to 23,090 yuan/mt as of the noon on March 21, recording four consecutive days of increase.

In the spot market, the spot price of SMM A00 aluminium rose to 22,970-23,010 yuan/mt today.

Policy

According to the official website of the Australian Department of Foreign Affairs on March 20, the Australian government has immediately banned the export of alumina and aluminium ore, including bauxite, to Russia. Aluminium is one of Russia's key exports, and Australian Prime Minister Scott Morrison said in a statement: "Russia relies on Australia for nearly 20% of its alumina demand and this ban will limit Russia's ability to produce aluminium."

Fundamentals:

On March 21, the aluminium ingot social inventory in China’s major markets totalled 1.06 million mt, down 28,000 mt from last Thursday. The operating aluminium capacity in China increased slightly, but the total output was still lower than in the same period last year. The transportation efficiency of aluminium ingots in some areas declined due to the pandemic.

Affected by the shutdown of some aluminium capacity in Germany, more than 900,000 mt of overseas aluminium output has been lost since December last year.

The operating rates of aluminium extrusion, plate/sheet, strip and foil sectors continued to recover. However, the pandemic-induced logistics issues could potentially hurt the consumption. The domestic aluminium ingot social inventory may continue to decline as slower transportation due to the pandemic will affect arrivals. Low inventory in China and overseas will support aluminium prices at elevated levels in the short term.