Aluminum Futures Historical Prices
Source: investing.com
In our first bulletin, aluminium prices had increased significantly to skyrocket at 2,644 USD/t at the beginning of April when the initial sanctions were put into place. In comparison to our last bulletins, aluminium prices have slightly increased reaching (2.333,25 USD/t, as of 16thMay). The reasons for this increase after the sanctions were postponed to October is the reverse cancellations of orders at the Malaysian port of Port Klang earlier this week. The LME registered back 138’650 tonnes at the same location. The level of price is trying to find its mark since the report of the US sanctions against Russian companies to the 23rdOctober 2018.
Forward Curve Primary Aluminum LME
Bloomberg (2018) Bloomberg Professional [Online]. Available at: Subscription Service (Accessed: 16th March 2018)
Like our second bulletin, the forward curve for aluminium as of the 16th Mai on the LME begin by a backwardation between around 06/2018 to 09/2021. The market is in backwardation because traders expect to experience an overproduction outside the United-States. This overproduction is due to the sanction against Rusal and the US threats of tariffs that might touch the EU in June 2018. Then it changes into a supercontango beginning 2022. We still have an artificial physical shortage as trader keep the metal in their warehouses. Traders are long physical and short future. Their goal is to take advantage of the supercontango.
Forward curve
Source: lme
Rusal:
The impact of the US sanctions over the companies are not measurable yet. Rusal experienced an excellent year in 2017 and its result for the first quarter of 2018 (total revenue of 2.744 billion US dollars) is comparable with the trend of 2017. The aluminium company released its first quarter result last week. The company has performed truly well with an increase of 20.4 % of its adjusted EBITDA in comparison with the overall 2017. The revenue linked to the sale of primary aluminium went up of 16.9% for the first quarter of 2018. Nevertheless, it is true that Rusal performed slightly better during the last quarter of 2017. The US sanction hit the company truly recently and thus has had almost no impact on the P&L of the Russian company yet. Indeed, the US sanctioned the Russian company only the last week of the first quarter. During the release of its results, Rusal has tried to calm its stakeholder and the market about the impact of the US sanction and has guaranteed that the company will respect its commitment regarding its creditors, shareholders and investors. Nevertheless, Rusal admitted that at the moment nobody can measure how badly the business will be touched in the long-run.
The stock market’s reactions represents well the situation. Rusal’s share on the Hod Kong exchange has lost about 65% of its value at the announcement of the initial sanctions. Not surprisingly, the shares of Rio Tinto, the oil producer seconding Rusal in terms of production, has seen its share increasing. The share price of Rusal is floating around 2.00 HKD and we do not see it regaining strength in the upcoming future as no solution to the sanctions has been found yet, and the company has just received some breathing space.
Source: Bloomberg
Source: Bloomberg
TRUMP VS Tusk and all his European friends
On Wednesday 16thof May, there was a European summit in Sofia where all the main leaders of European countries met. During that summit, the different leaders wanted to show their unity regarding the threat of the American tariffs for the aluminium and steel. The European Union is exempted of the tariffs until the 1stJune 2018. The Union also discussed extensively about their willingness to respect their commitments with Iran and the nuclear deal.
Tusk during the summit:
“The EU and U.S. are friends and partners. Therefore U.S. tariffs cannot be justified on the basis of national security. It is absurd to even think that the EU could be a threat to the United States.” EU willing to discuss cutting trade barriers with U.S.: MerkelIn bitter comments, Tusk said Trump has rid Europe of “all illusions” with the trade dispute and by pulling out of an international nuclear deal with Iran.
“Looking at the latest decisions of President Trump someone could even think: with friends like that who needs enemies. But frankly speaking, Europe should be grateful to President Trump. Because thanks to him we have got rid of all illusions. He has made us realise that if you need a helping hand, you will find one at the end of your arm,”
Video
Sources
https://aluminiuminsider.com/rusal-pre-sanction-q1-recurring-profit-jumped-22-4-to-us531-mm/
https://www.lme.com/en-GB/Metals/Non-ferrous/Aluminium#tabIndex=0
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