TAKING STOCK


OF ALUMINIUM Since the 1990s, LME aluminium has been a steady market enjoying stable spreads and large trading volumes, with downward pressure on prices as production migrated to regions with cheap power.


Aluminium consumers have benefitted, with car companies able to lock in long term price hedges against their model life-cycles. From a consumer’s viewpoint, market stability has been interrupted a few times in the last 25 years, with President Trump’s administration the latest catalyst for change.


Chart 1


1. MOU  when the collapse of the USSR’s Centrally Planned Economy saw massive exports of surplus Russian metal into the west, creating a then unprecedented 


This stock was cleared by a government brokered Memorandum of Understanding (MoU), with western  production, although Russian exports doubled in 


The MoU reduced the LME stockpile to “normal levels” then faded quickly under consumer anti-trust lawsuits, and aluminium producers would not mingle at industry functions for many years after.


    was low, spreads were tight, allowing massive tonnages to be booked in the most stable of LME markets.


  physical demand and weak metal prices saw LME  


   


Source: Reuters/LME


   largely due to growth in China).


8 | ADMISI - The Ghost In The Machine | July/August 2018


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