May 26, 2022

AEGIS is attending the Harbor Aluminum Summit at the Radisson Blu Aqua Hotel in Chicago on June 7 – 9. If you would like to schedule a meeting during the summit, please contact Patrick McCrann at pmccrann@aegis-hedging.com or (713) 936-2806.

Soaring energy costs made worse by Russia's invasion of Ukraine forced European aluminum smelters to further curtail production in April, adding to ongoing economic curtailments since last year. Through April, Western European primary aluminum production was 0.989 million mt, down nearly 11% from the 1.113 million mt in the same period in 2021, according to the International Aluminum Institute. Eastern European production, which includes Russia, was 1.346 million mt through April, down slightly from the 1.366 million mt produced in Jan – April 2021.

When several European smelters began curtailing production in 3Q2021, it was expected to be a short-term hiccup, according to Reuters. Even as Europe takes steps to increase supply from non-Russia sources and build up gas inventories, western Europe is likely not to have a comfortable amount of supply built up by winter. Electricity prices remain high and could continue to cap aluminum production, leading to higher global prices. Aluminum end-users such as beverage producers could consider hedging future needs via swaps or call options, as doing so can help guard against a potential increase in aluminum input costs. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (5/26/2022)

Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. 

Price Indications

Today's Charts

AEGIS Insights

05/23/2022: India's Steel Exports Tariffs Shock Producers

05/18/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

05/11/2022: China's Metals Exports are on the Rise

5/24/2022: Nickel market to swing to mild surplus persisting beyond 2022: Nornickel

5/23/2022: India raises export duty on iron ore, Chinese reception mixed

5/23/2022: Moody's says increase in India's export duties on iron ore, pellets to raise costs for steel mills

5/22/2022: Indian steelmakers face hit on Europe deals over export tax, Jindal executive says

5/21/2022: Work suspended at Botswana's Khoemacau copper mine after accident kills two

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