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Hydro and Alcoa have announced to stop cooperation with Russia, what is the impact on global aluminum prices

Hydro and Alcoa have announced to stop cooperation with Russia, what is the impact on global aluminum prices

Recently Alcoa (Alcoa for short) issued a statement on the Russia-Ukraine crisis.

The statement pointed out that although Alcoa has no business in Ukraine or Russia, in order to cope with the current war between Russia and Ukraine, Alcoa has decided after evaluation to stop buying raw materials from or selling the company’s products to Russian companies.

Meanwhile, on March 2, Hydro’s official website also broke the news that the company had decided not to sign new contracts with Russia until further notice, due to Russia’s invasion of Ukraine and the sanctions imposed on Russia by the European Union and the international community. In addition, Hydro is still evaluating decisions, including whether to freeze business relations with its Russian counterparts.

Under the spreading war between Russia and Ukraine, Europe and the United States are gradually increasing sanctions against Russia; although the United States and Germany issued a solemn statement in the early stage that they will not impose sanctions on the Russian energy industry, but from the recent news, from the above Alcoa and Hydro’s statement to Russia we can easily see that the two have begun to resist the output or purchase of products to Russia; sanctions have inevitably been associated with Russia and the European region’s energy, commodities market; but what derivative effect will this move have on the Russian aluminum market and even the global aluminum market?

▲1. At present, Hydro does not undertake the supply of key business from Russia or Ukraine, but has commercial relations with some trading companies as well as Russian aluminum producers, including the sale and purchase of bauxite and alumina raw materials, aluminum metal for remelting and aluminum rods. In addition, the actual output of Alcoa to Russia is not large in magnitude and cannot directly affect the Russian aluminum market. From an industrial point of view, the two aluminum companies’ statement of sanctions against Russia may only be reflected in the hype at the news end, thus driving the global aluminum price up sharply, and the actual impact on the local market is hardly large.

▲2, for the global market, Rusal, Hydro, Alcoa are several companies with greater market influence, with the further escalation of sanctions, Russia will gradually launch countermeasures, and Rusal accounts for more than 10% of the global aluminum market output, in the escalation of conflicts, we can not rule out the possibility that Rusal or will suspend the output of aluminum products to Europe and the United States, this move will further intensify the global aluminum market supply shortage, thus promoting global aluminum prices soar to new highs again.

Summary

Overall, the foreign market, in the current overseas sanctions escalating measures, we predict that the Lun aluminum in breakthrough 3600 U.S. dollars mark or will continue to move up, the main reason is still the lack of supply and logistics of the inconvenience; And there are institutions to give predictions Lun aluminum highest or is expected to touch “4000″ U.S. dollars; In our opinion, 4000 mark or difficult to reach, but if Europe and the United States and Russia contradictions do not see relief, Lun aluminum is expected to breakthrough to 3800 U.S. dollars!

And the domestic side, the foreign market rises to drive the Shanghai aluminum also higher, but the fundamentals are still dominant domestic aluminum price one of the main reasons, in the homeopathic bullish at the same time we should not ignore the actual domestic market, consider the overseas situation uncertainty factor is large, we think the Shanghai aluminum short term is expected to touch 24000 mark, but the actual breakthrough standing pressure is larger, more smooth running range can pay attention to between 22800-23500.


Post time: Mar-04-2022