Aluminium Prices see a significant uptrend in April; sanctions on Russian metal exports further spiked the trend

The imposition of sanctions by the United States and the United Kingdom on Russian metals, specifically aluminum, has contributed to the ongoing increase in aluminum prices. These sanctions, targeting Russia, a significant global producer of aluminum, are intended to cut off revenue streams that could support military operations. As Russian supplies dwindle, this has introduced additional uncertainty into international markets, with concerns emerging about potential oversupply from older stocks.

Parallelly, China's aluminum production experienced a notable recovery in March, with a year-on-year increase of 4.19% as operations normalized post-Chinese New Year. This increase was supported by the reopening of smelters and a rise in aluminum liquid output, with expectations for further production increases anticipated as operations fully resume by mid-April.

Previously, China's aluminium production was affected by drought conditions in Yunnan Province, which significantly reduced output in February to the lowest levels in a year. With the end of the dry season approaching in April, output levels are expected to improve, potentially stabilizing the market.

Similarly, the Main Japanese Port (MJP) premium also saw a substantial 61% quarterly increase, primarily driven by demand from China and South Korea. Despite this increase, there is caution about the sustainability of such high prices, especially as Chinese production levels are expected to stabilize in the second quarter.

While aluminum prices have been rising, the situation is anticipated to see a potential de-intensification, with several factors suggesting that the trend may not be sustained over the long term, especially as production stabilizes in key regions.

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According to the article by Procurement Resource, Sanctions on Russian aluminum by the US and UK have driven up prices due to reduced supplies and market uncertainty. Meanwhile, China's aluminum output rose by 4.19% in March post-New Year, with further increases expected. However, a previous drought in Yunnan curbed production. Despite a significant rise in the Main Japanese Port premium, driven by Asian demand, price sustainability remains uncertain as Chinese production stabilizes, potentially easing market pressures.