Korea’s Aluminum Flat Product Prices Surge Amidst Global Market Dynamics
Korea has witnessed a significant uptick in aluminum flat product prices for May shipments, with leading manufacturers Choil Aluminum and Novelis Korea raising their prices by 490,000 won and 480,000 won per ton respectively. Additionally, local prices have been adjusted upwards by $270 in response to the recent hikes in the London Metal Exchange (LME) aluminum prices, which saw a notable increase from $2,222.35 per ton in March to $2,497.88 in April, marking a 12.4 percent rise.
The escalation in prices is partly attributed to the stronger U.S. dollar exchange rate, which also influenced the pricing decisions. Furthermore, the global aluminum market has reacted to geopolitical tensions, particularly the U.S. and UK’s embargoes on Russian aluminum imports starting April 14, which also included prohibitions on domestic trading within these countries. These unexpected measures have intensified concerns about potential supply shortages, thereby impacting trading activities on major platforms like the LME and the Chicago Mercantile Exchange.
On April 19, aluminum prices briefly soared to the $2,600 per ton level due to significant destocking at the LME. However, the surge was tempered by rumors that the sanctions might not strictly apply to direct transactions between traders that bypass the exchanges. Despite these fluctuations, the LME’s aluminum inventories decreased to 504,000 tons by April 19, with stocks on warrant reaching a historical low of 171,200 tons.
Price volatility was evident with the aluminum cash-May spread experiencing unprecedented fluctuations on April 16, leading to some transactions shifting to backwardation of up to $11 per ton. By April 29, aluminum prices tested the $2,600 level again, supported by renewed optimism for demand recovery.
The Korean won also strengthened against the U.S. dollar, moving from 1,331.64 won in March to 1,369.25 won in April, marking a 7 percent increase year to date. This rate surpassed levels seen during the 2008-2009 global financial crisis. Additionally, after a two-week negotiation deadlock, the second quarter MJP aluminum prices surged 62.8 percent to $146.5 per ton.
