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Reuters

If you don't like the message, you can always shoot the messenger.
Russian aluminium giant Rusal doesn't like the aluminium price. And why would it?
The London Metal Exchange (LME) three-month price has perked up a little over the past week or so but at about US$1,860 a tonne is historically low and barely changed from the start of the year.
Even worse from a producer's perspective, the previous lifeline of high global physical premiums is rapidly sinking as well. Premiums are in free fall in Asia and Europe and looking decidedly wobbly in the United States.
The problem, according to Rusal chief executive Vladislav Soloviev, is all those speculators operating on the LME. Their actions, he claims, have depressed the LME price by as much as 30 per cent relative to the "real supply and demand balance".
The solution, in Rusal's view, is more transparency on what the money men are up to.
Rusal is singing from the same song-sheet as its US peer Alcoa, which led the original calls for the LME to introduce a US-style commitments of traders report and, once it had done so, urged it to add more detail, specifically about investment players.
Transparency, we can all agree, is a very good thing on any commodity market. However, transparency alone is not going to resolve the market forces driving the global aluminium market.
Even if Soloviev is right and investors/speculators have been punishing the aluminium price, the most pertinent question might be, why.
The answer, presumably, is they see no particular reason to be bullish about aluminium's prospects in the short term.
This is not a problem with demand. Aluminium's usage profile is still among the strongest of any of the industrial metals.
Rather, just as it has been for many years now, the problem is about supply. Global aluminium output grew by 5.6 per cent in the first quarter of this year, according to the International Aluminium Institute (IAI). Most of that increase was down to China, also extending a multiyear theme.
The market once shrugged off what was happening in the Chinese parallel aluminium universe but that's getting harder to do as metal in the form of semi-manufactured product continues to wash out of the country into the international marketplace.
China exported 1.07 million tonnes of such products in the first quarter of this year, representing a year-on-year increase of 353,000 tonnes.
The pace has slowed since December, when almost 500,000 tonnes left China. That now looks like an outlier month with exporters rushing to beat rumoured changes in the preferential tax treatment of semis.
But exports are still running extremely strong and rather than clamping down on the trade, the Chinese authorities have just removed tariffs on non-alloyed rods and bars, potentially adding to the flood.
The outbound flow, it seems, is going to continue, just as long as the trade remains profitable.
Producers such as Rusal and Alcoa try to play down the impact of this Chinese export flow but it must nevertheless be galling that any market deficit created by successive rounds of smelter curtailments is being swamped by metal from the least disciplined part of the global supply chain.
But oversupply is not just a Chinese matter.
Rusal may have taken the axe to its higher-cost smelters but is preparing to fire up its 600,000-tonne per year Boguchansk plant in Siberia.
Russian customs figures show the country exported 558,000 tonnes of aluminium outside the Commonwealth of Independent States in January and February. That represented a 44 per cent increase from the 387,000 tonnes exported in the same two months of 2014.
Reuters


Aluminium oversupply is not just a Chinese matter

Rusal says speculation is hurting the price of aluminium. Photo: Reuters

China's aluminium surplus chips away at global deficit

With more mainland aluminium finding its way to global markets, the likelihood is that premiums will continue to drop. Photo: Corbis

China's aluminium tug of war stuck in repeat mode

Exports of semi-finished aluminium products rose last year, with shipments of bars, rods and profiles reaching 854,682 tonnes. Photo: Reuters

Rusal expects favourable aluminium prices

Rusal says it has no plan to restart this year smelting capacity idled in the past two years due to oversupply. Photo: Reuters

Business

Commodities

If you don't like the message, you can always shoot the messenger. Russian aluminium giant Rusal doesn't like the aluminium price. And why would it?


Aluminium oversupply is not just a Chinese matter

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}If you don't like the message, you can always shoot the messenger. Russian aluminium giant Rusal doesn't like the aluminium price. And why would it?

If you don't like the message, you can always shoot the messenger. Russian aluminium giant Rusal doesn't like the aluminium price. And why would it?