You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Aluminum jumps again as Guinea coup adds to supply worries

Prices have surged this year.
Image: Bloomberg
Aluminum climbed to the highest in more than a decade after a coup in Guinea fueled concerns over raw material supplies, at a time when global output is already constrained and demand is booming.

Aluminum prices gained in London and Shanghai and producers’ shares surged — industry leader Aluminum Corp. of China, or Chalco, jumped as much as 10%, while United Rusal traded 15% higher. Guinea is a major supplier of bauxite, the feedstock needed to make aluminum, and accounts for more than half of the imports by China.

Moneyweb Insider INSIDERGOLD

Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

Choose an option:

R63 per month
R630 per year SAVE R126

You will be redirected to a checkout page.
To view all features and options, click here.

A monthly subscription is charged pro rata, based on the day of purchase. This is non-refundable and includes a R5 once-off sign-up fee.
A yearly subscription is refundable within 14 days of purchase and includes a 365-day membership.

Click here for more information.

A unit of the military seized power Sunday and suspended the constitution, with head of special forces, Colonel Mamady Doumbouya, urging the army to back him. While the unrest raises the possibility of disruption, so far there’s no sign that shipments or mines have been affected. Chalco, which has a bauxite project in Guinea, said all of its operations are normal and it has ample bauxite inventories at its plants in China.

Aluminum, which is used in everything from car parts to drinks cans and home appliances, had already climbed about 38% this year in London before the coup, as consumer demand and economic activity rebound. At the same time, smelters in China have struggled to maintain output during a seasonal power crunch and as Beijing seeks to rein in the country’s carbon emissions.

While Rusal founder Oleg Deripaska warned that the market “can be seriously shaken” by the situation, traders were still waiting on Monday for further clues about potential supply cuts.

The bauxite market has been in surplus for years, and any disruption would need to be severe to alter that dynamic, according to Michael Widmer, head of metals research at Bank of America Merrill Lynch.

“I’m bullish aluminum, but for different reasons,” Widmer said by phone from London. “That said, if you do have issues in a country that supplies 20% of bauxite to the global market, then clearly that will be a problem.”

Prices on the London Metal Exchange rose as much as 1.8% to $2 775.50 a ton, the highest since May 2011, and traded at $2 756.50 as of 10:34 a.m.. In China, futures jumped as much as 3.4% to the highest since 2006, before paring gains to 2.2%. Other industrial metals were mixed on the LME, with copper little changed and nickel down 1.8%.

“Investors are quite concerned given China buys a big chunk of bauxite from Guinea,” though there haven’t been reports of disruptions yet and the extent of any impact will depend on how the situation evolves, said Xiong Hui, chief aluminum analyst with Beijing Antaike Information Development Co.

Investors are also looking at ongoing production cuts in China’s Guangxi province, which is further tightening the market, Hui said.

The energy-intensive aluminum industry has come under increased scrutiny as part of Beijing’s pollution crackdown. China produces around 60% of the world’s total, with concerns around output prompting some of its largest smelters to pledge to ensure supply, and metal to be released from state reserves to ease tightness. The country has become increasingly reliant on imports, a rare development that’s drained global supplies of the usually abundant metal.

© 2021 Bloomberg

COMMENTS   1

You must be signed in to comment.

SIGN IN SIGN UP

I am sure China will fix the problem amicably as they did in Zimbabwe.

China is the only super power that can bring stability on the African continent, apart from our people themselves.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

SEARCH COMPANIES
Enter company name or share code:

ECONOMIC DATA  

  CPIThe Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products Aug 2021 4.60%
  CPI ex OERThe Consumer Price Index excluding Owners’ Equivalent Rent (CPI ex OER) measures monthly changes in prices for a range of consumer products excluding Owners’ equivalent rent that measures changes in the cost of owner-occupied housing Aug 2021 5.20%
  RepoThe rate at which the Reserve Bank lends money to the country’s commercial banks and set by the Reserve Bank’s Monetary Policy Committee. Sep 2021 3.50%
  Prime lendingThe Prime Lending Rate is the rate of interest that commercial banks will charge their clients when issuing a loan (home loan or vehicle finance) Sep 2021 7.00%
INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles:
Click a Company: