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Aluminium/Bauxite

Aluminum market to rebalance, prices to hold steady: Reuters poll – by Eric Onstad (Reuters U.S. – April 30, 2018)

https://www.reuters.com/

LONDON (Reuters) – Aluminum market deficits are set to deepen, but the market is likely to rebalance once the dust settles after U.S. sanctions on Russian producer Rusal, leaving prices little changed, a Reuters poll showed.

Prices on the London Metal Exchange soared by a third, lifting the metal to its highest in nearly seven years, after the United States imposed sanctions this month against billionaire Oleg Deripaska and his company Rusal, the world’s No.2 aluminum producer.

However, much of those gains were lost after the deadline to comply with the sanctions was extended by several months. “Sanctions against Rusal are the main market theme. However, according to our estimates, restarts of U.S. capacity and excess capacity in China should easily compensate for lower Russian exports,” said Daniela Corsini, commodity market economist at Intesa Sanpaolo in Milan.

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U.S. aluminum producers urge permanent tariff exemptions for Canada – by Naomi Powell (Financial Post – April 27, 2018)

http://business.financialpost.com/

American aluminum producers have issued a plea to U.S. President Donald Trump to grant permanent tariff exemptions to trading partners including Canada, arguing the levies would hurt downstream manufacturers who rely on the imported metal.

The appeal from the industry’s main trade association in the United States comes as Canada’s temporary reprieve from tariffs of 10 per cent on aluminum and 25 per cent on steel is set to expire on May 1. The U.S. has said the exemptions are dependent on the successful renegotiation of the North American Free Trade Agreement, which remains the subject of intense negotiations in Washington.

“I urge you to grant permanent exemptions — without quotas — for our aluminum trading partners that operate as market economies,” Heidi Brock, chief executive of the U.S. aluminum association said in a letter to Trump this week. “I also encourage you to engage China to address structural aluminum overcapacity.”

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Commentary: U.S. sanctions on Rusal shatter aluminium’s supply chain – by Andy Home (Reuters U.K. – April 26, 2018)

https://uk.reuters.com/

LONDON (Reuters) – “Our industry is going to suffer from disruption, distortion and damage. April 2018 has not been a good month for aluminium globally.”

That was the view of Ron Knapp, secretary-general of the International Aluminium Institute (IAI), in his opening address to CRU’s World Aluminium Conference in London.

And none of analysts, traders, producers and consumers listening would disagree, given the carnage unleashed by the April 6 imposition of U.S. sanctions on Russian oligarch Oleg Deripaska and his Rusal aluminium empire.

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After Weeks of Chaos, U.S. Throws Aluminum Industry Lifeline – by Jack Farchy and Yuliya Fedorinova (Bloomberg News – April 24, 2018)

https://www.bloomberg.com/

After two weeks of convulsions caused by U.S. sanctions against United Co. Rusal, the metals market was braced for more mayhem: many traders were betting the Russian aluminum giant was just days away from having to shut plants from Sweden to Jamaica.

Then on Monday, the U.S. Treasury threw a potential lifeline by making clear it’s not pushing for the company’s collapse. “The U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” Treasury Secretary Steven Mnuchin said.

The Treasury softened its position in three ways. Mnuchin said it was considering a request to lift the sanctions against the company, it extended the period during which companies could keep trading with Rusal by almost five months, and it clarified exactly what dealings were permissible during that time.

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As Rusal Sanctions Ease, Traders Eye Other Metal Shock Threats – by Susanne Barton (Bloomberg News – April 23, 2018)

https://www.bloomberg.com/

The turmoil in the metals market that sent aluminum to its worst slump in almost eight years isn’t over. Buckle up for a longer bumpy ride ahead.

Aluminum led losses among metals Monday after the U.S. Treasury Department opened the door to relief from sanctions to United Co. Rusal, the largest aluminum producer outside of China. That triggered a selloff in the lightweight metal less than a week after the Rusal curbs sent prices soaring to an almost seven-year high.

While the Treasury Department’s statement signal the refined metal produced by Rusal could soon be back in the market, other uncertainties persist. Among those is the question of the flow of alumina, the main raw material used to make the refined metal.

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‘People will revolt’: workers say Russia must save sanctions-hit Rusal – by Polina Ivanova (Reuters U.S. – April 23, 2018)

https://www.reuters.com/

SAYANOGORSK, Russia (Reuters) – Workers at one of Russia’s biggest aluminum smelters say their Siberian town is doomed unless Moscow mitigates U.S. sanctions against aluminum giant Rusal, a predicament mirrored across the company’s sprawling operations.

Trapped by mortgages for apartments built on barren steppe under communism, residents of Sayanogorsk, one of a string of towns dominated by Rusal, have few options if a loss of customers for its aluminum leads the firm to cut jobs.

“The entire life of this city depends on Rusal,” said Evgeny Ivanov, until recently a foreman at the plant in Sayanogorsk, where pockmarked asphalt recalls the harsh winters endured by its 60,000 inhabitants, and icy blue mountains line the horizon.

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Chalco first quarter profits fall 19.4 percent on lower aluminum prices – by Tom Daly (Reuters U.S. – April 23, 2018)

https://www.reuters.com/

BEIJING (Reuters) – Aluminum Corp of China Ltd (601600.SS) (2600.HK), known as Chalco, said on Monday that first-quarter net profits fell by 19.4 percent from a year ago due to lower aluminum prices but one-off gains helped it avoid a much worse result.

The company, China’s biggest state-run aluminum producer, said in a filing to the Shanghai Stock Exchange that net profit during the January to March was 308.6 million yuan ($48.94 million), versus an adjusted net profit of 382.9 million yuan a year earlier. Revenues, meanwhile, fell by 10.5 percent to 36.7 billion yuan.

The numbers point to thinning margins for aluminum smelters in China, the world’s biggest producer of the metal, in a quarter when prices fell.

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Aluminum Stash Visible From Space Turned to Gold for Trader – by Jack Farchy, Andy Hoffman and Mark Burton (Bloomberg News – April 20, 2018)

https://www.bloombergquint.com/

(Bloomberg) — Two years ago, a commodity trading house started stockpiling thousands of tons of aluminum near a bend in the Mississippi River outside New Orleans.

Now Castleton Commodities International LLC, the trader backed by hedge fund luminaries including Paul Tudor Jones, is sitting on a veritable gold mine as a scramble for aluminum unfolds in the wake of U.S. sanctions against United Co. Rusal and Donald Trump’s aluminum tariffs.

Castleton has started selling down its aluminum stash, which at its peak held about 500,000 metric tons of the metal, according to people familiar with the matter. That would be worth about $1.5 billion at today’s prices.

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Goldman Sachs Warns Rusal Shock May Drive Aluminum to $3,000 – by Swansy Afonso (Bloomberg News – April 18, 2018)

https://www.bloomberg.com/

Goldman Sachs Group Inc. says that the extraordinary rally in aluminum unleashed by U.S. sanctions against United Co. Rusal may have way, way further to go, forecasting the metal may spike to $3,000 a metric ton, while raising the possibility of further curbs against Russian coal supplies.

The metal may surge to between $2,800 and $3,000 in the near term as the U.S. moves against the second-largest producer have “dramatically affected” the market, the bank said in a note received Wednesday as it boosted price predictions for three, six and 12 months. The $3,000 target is 25 percent above Tuesday’s close, and almost 50 percent above the price before the curbs.

“U.S. sanctions on Russian oligarchs and the companies that they own or control have dramatically affected the aluminum market,” the bank said. “The uncertainty associated with our forecasts is great. In the event that resolutions are not found quickly enough, prices are likely to exceed our forecasts.”

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Aluminum producers push to form global industry group to curb ‘abundant overcapacities’ – by Naomi Powell (Financial Post – April 18, 2018)

http://business.financialpost.com/

Canadian aluminum producers are pushing G20 leaders to form a global industry group to manage excess capacity of the metal amid ongoing turbulence in the industry due to U.S. import tariffs on China and sanctions on Russia’s United Company Rusal, the world’s second largest aluminum producer.

The Aluminum Association of Canada, along with similar organizations from Europe, the United States, Japan, Brazil and Mexico sent a joint letter last week pressing foreign ministers to establish a forum similar to the one created for the steel industry at the G20 summit in Hangzhou, China in 2016.

The various aluminum associations will hold a preliminary gathering in Montreal on June 4 to develop a “road map” for the proposed Global Aluminum Forum ahead of the 2018 G20 summit in Argentina.

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Commentary: Rusal sanctions shockwaves slam into aluminium market – by Andy Home (Reuters U.K. – April 16, 2018)

https://uk.reuters.com/

LONDON (Reuters) – The aluminium market has never experienced anything like it. Since the United States imposed sanctions on Russian oligarch Oleg Deripaska and United Company Rusal on April 6, aluminium has been in turmoil.

The London Metal Exchange (LME) price hit a six-year high of $2,340 per tonne last Friday. The weekly rally of nearly 12 percent was the largest since the launch of the LME’s high-grade contract in 1987.

Physical premiums in the United States are at three-year highs and the price of alumina is going haywire. The tremors caused by sanctions on the world’s largest producer outside China are still racing down multiple channels of a supply chain that has historically been defined by surplus metal.

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Goldman Sachs Says You Must Own Commodities in These Tense Times – by Pratish Narayanan (Bloomberg News – April 13, 2018)

https://www.bloomberg.com/

The case for owning commodities has rarely been stronger, according to Goldman Sachs Group Inc. With raw materials rallying on escalating political tensions across the globe and economic growth remaining strong, the bank’s analysts including Jeffrey Currie doubled down on their “overweight” recommendation.

They reiterated a view that commodities will yield returns of 10 percent over the next 12 months, according to an April 12 note.

The Bloomberg Commodity Index is up more than 2.5 percent this week, the most in two months. Another raw materials gauge, the S&P GSCI Index, has rallied over 5 percent this week to levels last seen in 2014.

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Commentary: U.S. sanctions are an aluminium-tipped precision strike – by Andy Home (Reuters U.K. – April 13, 2018)

https://uk.reuters.com/

LONDON (Reuters) – When it comes to U.S. sanctions, it seems not all Russian oligarchs are created equal. Seven were designated by the Treasury Department for sanctions along with 17 Russian government officials.

But one has been singled out for special treatment: Oleg Deripaska, owner of the world’s largest aluminium producer outside of China. Of the 12 companies subject to sanctions, eight are controlled by Deripaska.

United Company Rusal, which produces 6 percent of the world’s aluminium in any year, takes centre stage.

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Can China fill aluminum shortage after Rusal sanctioned? – by Eric Onstad and Melanie Burton (Reuters U.S. – April 12, 2018)

https://www.reuters.com/

LONDON/MELBOURNE (Reuters) – Dominant aluminum producer China may help fill a gap in global supply after the United States slapped sanctions on Russia’s aluminum giant Rusal.

But a tangle of tariffs will obstruct flows to the United States so aluminum consumers will need to find other solutions as well, industry experts said.

International prices, which have shot up more than 10 percent since the sanctions were announced, will have to rise further to lure exports from China, whose metal faces a range of tariffs and duties.

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Deripaska’s empire under threat as U.S. hits Russia with sanctions – by Eric Reguly (Globe and Mail – April 11, 2018)

https://www.theglobeandmail.com/

Only six months ago, Russian billionaire Oleg Deripaska, said to be President Vladimir Putin’s favourite oligarch, was on top of the world. He had just pulled off a remarkable feat: the listing of his hydropower and aluminum holdings company EN+ Group on the London Stock Exchange, the first Russian company to do so since Russia’s invasion of Crimea in 2014.

Today, he is fighting to save his empire from destruction. On Friday, he and eight of his industrial companies were hit with punishing U.S. sanctions that could last years.

While Mr. Deripaska was only one of seven Russian oligarchs and a dozen of their business to land on the sanctions list, he has the most to lose, given the vast scale of his Russian holdings, which have 150,000 employees.

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