WEEK IN BRIEF: Aluminium price coalition; demand growth; premiums; Noble; silico-manganese; Chemk

After another busy week in our global newsrooms, we have outlined some of the big stories from the past few days.

After another busy week in our global newsrooms, we have outlined some of the big stories from the past few days.

China’s biggest aluminium smelter, Chalco, offered more aluminium ingot in the spot market this week amid rising liquidity pressures in China, raising questions about the future of a price coalition in which it plays a leading role, according to market participants. 

The move clouds the outlook for the price coalition, as some suggested it would prompt its allies in the coalition to increase selling as a result.

Companies, including Glencore, and some brokerages have suggested the Shanghai Futures Exchange should list more brands for delivery against its aluminium contracts, in response to the coalition’s moves to support prices by storing material off-warrant, according to sources.

An official at Chalco International Trading, the smelter’s trading arm, declined to respond to questions about the company’s sales.

But he attributed falls in the domestic futures and spot market this week to similar movements in London Metal Exchange aluminium prices.

Officials at the SHFE and Glencore declined to comment.

Alcoa Inc, meanwhile, bumped up its aluminium demand growth estimates even as aluminium product shipments drifted lower in the first quarter. 

“The reality is, the demand for aluminium is strong,” Alcoa chairman and ceo Klaus Kleinfeld said during a conference call on the company’s quarterly results.

Global aluminium demand growth was pegged at 9% for 2014, compared with an earlier forecast of 7%, putting the total at 54 million tonnes, and the Pittsburgh, USA-based aluminium producer expects this year’s tally to grow 6.5% to a record 57.5 million tonnes.

More on Alcoa’s sales growth forecasts here.

Kleinfeld also said this week that a drop in US midwest aluminium premiums over the past three months was largely a result of “fake semis” entering the USA from China.

Sources close to the process, meanwhile, told Metal Bulletin that Alcoa has sold its Russia-based aluminium mill, Alcoa Metallurg Rus, to a wholly-owned subsidiary of Stupino Titanium Co, a large producer of alloys in the country,

And Southeastern Aluminum Products Inc has agreed to pay $650,000 to resolve allegations that it evaded duties on US imports of aluminium extrusions from China. 

In the steel sector, the ArcelorMittal ceo said the US steel industry is fighting to survive an import surge in market conditions similar to those that destroyed once-iconic steelmakers in the late 1990s.

Also this week, it was revealed that Société Générale will take over futures execution and clearing activities from fellow London Metal Exchange member Jefferies Bache in a deal that is expected to close by the end of June. More here.

In copper, prices look set to be trading somewhere around the $6,000-per-tonne mark on the London Metal Exchange as the copper industry convenes in Santiago for Cesco Week 2015, down 10% from levels seen during last year’s conference.

It will be the fourth consecutive year that delegates have encountered a year-on-year drop in copper prices, and the heady mood seen at Cesco Week in 2011, when copper was trading near $10,000, will seem like distant memory. Here, Mark Burton takes a look at the key issues ahead of the conference.

Shanghai copper premiums dipped this week after the Tomb-Sweeping holiday amid sluggish sentiment.

Muddy Waters Research, the investment research firm headed by Carson Block, put out a report stating it has gone short on Singapore-listed trader Noble Group, leading to another tumble in that company’s share price.

Noble has said it rejects all of the allegations made by the Muddy Waters report.

Lord Copper had this to say about powerhouses showing muscle by not “reacting” to weak demand.

The Myanmar Federation of Chambers of Commerce and Industry was, meanwhile, lobbying the government to put a draft mining law to the vote in the May-June session of the national parliament, as the country looks to attract foreign investors.

And cobalt prices surged by more than 5% on Wednesday, and further still on Friday, after news of a shutdown at one of the world’s biggest operations provided a boost for the previously languishing market.

Conversely, cadmium prices slipped further, hitting new multi-year lows as sentiment remained depressed as oversupply dogs the market.

India, meanwhile, removed the 4% export incentive it gives to domestic silico-manganese suppliers on exports to Europe, as it restructures the scheme as part of the government’s new foreign trade policy.

And CHEMK is to invest $550m over the next two years in upgrades at the Serov ferro-alloys plant and the Saranovsk chrome mine, a company spokesman told Metal Bulletin.

In the noble alloy markets, prices eased on Wednesday April 8 as eager sellers chased business after a week of limited activity.

Alex Harrison 
Twitter: @alexharrison_mb

Fleur Ritzema 
Twitter: FleurRitzema_MB 

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