Aluminium News For June 2014 – From Your Top UK Aluminium Suppliers
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Aluminium News for June 2014 – From Your Top UK Aluminium Suppliers

Aluminium is in the news again, no surprise when it's the world's most common metal. As stockists of aluminium bars, we like to keep our finger on the market's pulse. Here's our hardest-hitting aluminium news story for June 2014.

Aluminium tipped to usurp nickel in the next price war

Not so long ago Indonesia sparked a nickel price war, putting in place a supply-led export ban that saw the price of the metal increase by more than 40%. As you can imagine it gave the nickel industry a very nasty shock. But there's more... the shock waves could be set to continue if expert industry analyses are correct, with aluminium following suit in 2014 and an equivalent squeeze on aluminium supplies. So what's the story?

Controlling a whopping 10% of the planet's bauxite

Indonesia has the rest of the world over a barrel as far as aluminium suppliers are concerned. Before the nickel export ban they exported more than 10% of the planet's total bauxite – AKA aluminium ore – making them as influential in the metals market as Saudi Arabia is in the oil sector. As such, a price war seems entirely possible, if not likely.

Price hikes have already begun to bite

According to research by Goldman Sachs, in some cases bauxite price rises have already begun to bite. Take China, whose bauxite import prices have quietly risen from 52 dollars to 60 dollars per ton. Other nations are experiencing similar price hikes.

Last year China bought most of its aluminium from Indonesia. This year they took note of Indonesia's actions on nickel and stockpiled bauxite to ensure supplies for six months to a year ahead. Other forward-thinking producers have also increased their imports in anticipation of a ban. And other countries can step into the breach, including Australia, India and Guinea.

Lower, steadier price rises predicted

On the bright side, Goldman Sachs' analysts think aluminium and aluminium bars will see lower, steadier price rises than experienced recently in the nickel market. Indonesia produces a smaller percentage of the planet's bauxite than it does nickel, so they have less power in the market and an export ban will have less of an effect. Plus, bauxite represents a lower percentage of the eventual aluminium output costs than nickel ore does to nickel production.

We're looking at a 'bullish' aluminium market

Despite the good news as regards alternative supply lines, analysts are still predicting that rising prices will drive China and other major consumers of the metal to cut production, supporting the view that price rises are more or less inevitable. The Financial Times agrees, reporting one Asia-based metals trader's view as 'bullish'. When metal trading prices fluctuate, traders benefit. In their opinion there isn't an alternative bauxite supplier who can operate on the same scale as Indonesia, which makes the metal look like “an interesting bet”... 'interesting' in the Chinese sense!

Want to keep up with the latest news? As aluminium suppliers we're always keeping up to date with the latest industry changes. Watch this space.


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