Aluminum ingots pass along the production line in the foundry at a aluminium smelting plant (Photographer: Andrey Rudakov/Bloomberg)

Aluminum Set for Best Week in Three Decades as Supply Woes Mount

(Bloomberg) -- Aluminum prices are heading for the best week in at least three decades as U.S. sanctions on Russian producer United Co. Rusal send buyers scrambling to find supplies.

Prices of the metal climbed to the highest since 2012 Thursday, helping push this week’s gain to almost 14 percent, the most in Bloomberg records going back to June 1987. The U.S. premium, or the amount added to the London Metal Exchange price of aluminum to ship metal to the Midwest, jumped by the most on record.

On Thursday, Rusal was said to declare force majeure on some shipments of alumina, used to make aluminum. That comes a day after Glencore Plc, the biggest buyer of metal from Rusal, was said to have invoked the same legal clause on aluminum. The moves compound supply worries after the LME and CME Group Inc.’s Comex said they won’t allow new deliveries of metal from Russian billionaire Oleg Deripaska’s Rusal, the biggest aluminum producer outside China.

“People are rushing to secure supply,” Ryan McKay, a commodity strategist at TD Securities in Toronto, said in a telephone interview. “People are expecting that a significant amount of the metal produced by Rusal is going to be off the market.”

Aluminum for delivery in three months climbed as much as 3.6 percent to $2,331 a metric ton on the LME, the highest since March 2012. Prices settled 3.3 percent higher at $2,325 a ton at 5:51 p.m. in London.

Alcoa Corp., the biggest U.S. aluminum producer, advanced 0.9 percent to $54.47 on Thursday in New York. The Pittsburgh-based company has jumped 13 percent this week, on course for the biggest weekly gain of 2018.

The surge in the aluminum premium that buyers pay to have the LME metal delivered to the Midwest shows consumers in the U.S. are already feeling the pinch.

The duty-paid premium surged to a range of 21.75 cents to 23.55 cents a pound, according to Austin, Texas-based researcher Harbor Intelligence, up from a prior range of 17.25-18 cents.

The “increase has no precedent,” Jorge Vazquez, Harbor’s managing director, said in report dated Wednesday.

Force majeure is a legal clause that allows trader to leave contracts unfulfilled because of circumstances beyond their control.

READ MORE: 
  • Alumina Cargo Is Said to Trade at Multi-Year High of $530 a Ton
  • Timeout! Taking Stock of Aluminum Cross-Currents

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