World prices for aluminium: trade wars and geopolitics increased the demand

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The market of aluminium is important for the Russian economy. The largest Russian company RUSAL ranks third in the world in terms of production and receives billions of dollars of revenue from the export of metal and bauxite. The main importers of Russian aluminium United States and China. However, this year the aluminum market began to experience serious disruption. In April metal prices reached seven-year highs after the introduction of personal sanctions against the CEO of RUSAL Oleg Deripaska. Then the President of the United States imposed new tariffs on imports of aluminum and steel.
Global supply chains were disrupted, and on the metal market went into deficit because of lower production in Brazil and the reduction of supplies from Russia. 23 Oct planned new sanctions if not met us demands to the company “RUSAL”. It threatens disaster for the entire Russian aluminum industry. In August I was stopped by a single aluminum plant that supplied the metal in the United States. And the total production could fall by up to 70%.
Aluminum prices are sensitive to supply disruptions. 31 August on the London stock exchange prices jumped to $2065 a tonne after the announcement of the continuation of the strike at a major aluminium plant in Australia. The introduction of additional sanctions against RUSAL could raise the price to $2500. But the price of aluminum has its limits. At a certain level it is possible to replace aluminum with alternative materials of construction that are still losing value. In addition, trade wars delayed the growth of the economy and reduce demand for the metal. Therefore, even after the increase, prices should stabilize in the range of 2000-2300 $ per ton.
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Yevgeny Abramovich
Analyst
Forex broker FXOpen