CRU Aluminum: Relief Comes With Word of Pending UAW Deal

The year-over-year (YoY) demand had ramped up through Q3’23 perhaps a bit of inventory build ahead of the strike. Nonetheless, auto OEMs were producing at a better than 15-million-unit pace for the year. The strike clearly had the aluminum industry on-watch for Q4’23 orders and the early news of one labor deal almost at hand bodes well for the other two to fall in line. This could perhaps preserve the good news in 2023 for North American auto OEM aluminum demand.

As part of the joint CRU – Aluminum Association presentation content, the EV automotive panel also expressed optimism for the long-term view for EV’s continued growth. This is seen with a robust investment stream up and down the US Route 65 corridor where battery makers, aluminum battery foil producers, and rolling mills are geographically well situated to supply the burgeoning market. With billions of dollars flowing into the region, and giga-factories under construction, it was widely agreed that trained labor may be the single limiting factor to support the growth plans of the value chain.

Prices Warming as the Market Looks Ahead to Winter

The LME aluminum three-month price was moving higher the week ended Oct. 27, and was seen trading at $2,220 per tonne on Friday.

The SHFE price also resumed with gains the week ending Oct. 27, moving up just over 1% vs. the previous week’s close. The cash contract settled at RMB19,055/t and was seen trading at RMB19,095/t on Friday.

The higher SHFE price comes as China approved $136 billion of sovereign bond issue, which the government hopes will help drive domestic demand and further consolidate the recovery of the economy. The funds raised will be allocated to local regions, via the mechanism of transfer payment, according to the plan approved by the country’s top legislature on Tuesday, Oct. 24. In particular, the funds will be used to support the rebuilding of flood-hit areas and improve urban infrastructure to prevent further damage from natural disasters.

Russia Adding Aluminum Investments in China

Russian aluminum producer Rusal has conditionally agreed to purchase a 30% shareholding in Hebei Wenfeng New Materials (HWNM) of China for RMB1.91 billion ($261 million). As part of the deal, Rusal will be entitled to a 30% share of the metallurgical-grade calcined alumina that Wenfeng produces from its 4.8-million-metric-ton per year capacity refinery in Caofeidian district, Hebei province.

In a Hong Kong Stock Exchange filing, Rusal said: “As HWNM is engaged in alumina production, the directors consider that the acquisition will allow the company to gain access to alumina at a competitive cost and secure its key raw material supply.”

Completion of the transaction is subject to various conditions including approval from regulators, the companies, and Wenfeng’s creditors. The filing notes Wenfeng posted a RMB281-million net profit in 2022.

Though not directly sanctioned by all Western nations following Russia’s invasion of Ukraine, UC Rusal has increased its business with China since the conflict started in February of last year. Whether via formal sanctions or self-sanction by consumers, Russia’s strengthening its trade patterns with China must be related to the reduced number of opportunities in North America and Europe.

Novelis Announces Closing of Clayton NJ Foil and Finishing Operations

Novelis reported at Aluminum USA that it will be closing its foil and finishing operations at Clayton, N.J. With a nod towards imported finished aluminum foil packaging products undercutting the domestic market, the Clayton plant was deemed no longer viable. CRU has assessed Clayton’s annual capacity at nearly 80 million pounds. While US trade actions on imported foil have had recent success in creating more of a competitive market, finished foil packaging containers have not been a part of those cases to date.