Metals & Mining Monitor | Aluminum Prices Climbed on Surging Buying Interest and Supply Constraints; Codelco to Join Lithium Market with SQM Deal

Moomoo News AU joined discussion · Jun 3, 2024 16:43

Metals & Mining Monitor | Aluminum Prices Climbed on Surging Buying Interest and Supply Constraints; Codelco to Join Lithium Market with SQM Deal

Hello mooers! Check out the latest market dynamics of the metals and mining industry over the past week.
•Base metals: Aluminum prices climbed by 3%
•Precious metals: Silver prices briefly touched a 12-year high
•Bulk commodity: Iron ore prices dropped by 4.4%

Spot Price Snapshot

Key Price Moves

The spot price of $Aluminum Futures(MAR5) (ALImain.US)$ has risen by 3% week-over-week due to surging buying interest and supply tightness. A global aluminium producer has offered Japanese buyers a premium of $110 per tonne for October-December primary metal shipments, up 2% from the current quarter, according to five sources involved in the quarterly pricing talks. This follows an increase of 3% in the premium paid by Japanese buyers for the July-September quarter, which marked a second straight quarterly increase. The producer has stated that the higher offer reflects tighter shipments, as some supplies from Australia may continue to head to the United States due to Australia's exemption from the 10% import tariffs on aluminium imposed by the US in March 2018.

In addition, recent shortages of alumina, a key intermediary product in aluminum production, have resulted from reduced output in China and disruptions to Rio Tinto's Australian exports. Rio Tinto's declaration of force majeure on alumina cargoes from its Australian refineries due to gas shortages has heightened concerns about supply from the world's second-largest producer.

$Silver Futures(MAR5) (SImain.US)$ prices have increased by over 30% this year, reaching 12-year highs of approximately $32 per ounce last week, with a 2.2% increase over the past week alone. In contrast, $Gold Futures(FEB5) (GCmain.US)$ prices are currently around $2,350 per ounce, having gained only 14% so far this year.

The recent bull run for gold prices has primarily been driven by central banks' desire to diversify their assets, as well as consumer flight to safety amid macroeconomic uncertainties, particularly in China. In contrast, silver's strong performance this year has been underpinned by industrial demand.

While gold does have some industrial uses, it is primarily seen as a store of value and a hedge against economic uncertainty. In contrast, silver is heavily used in industry and technology, with half of all silver production used for these purposes. In particular, silver is a crucial raw material for the production of solar panels, which are in high demand as the world transitions to sustainable energy sources. China has been at the forefront of solar panel production, contributing to increased demand for silver. As Daniela Hathorn, a senior market analyst at Capital.com, noted,

The fact that silver has been outshining gold in recent weeks is due mostly to its application in manufacturing.

Top Company News

Codelco to Join Lithium Market with SQM Deal

Copper giant Codelco is set to become a major player in the lithium market after signing a partnership with $Sociedad Quimica Y Minera De Chile (SQM.US)$ that will give it a majority stake in the company's prized Chilean brine assets. The definitive agreement, announced on Friday, follows a preliminary accord reached between the two companies late last year. However, regulatory, community, and potential legal hurdles remain before the deal can be implemented early next year.

The partnership is a key part of President Gabriel Boric's agenda to increase state control of important lithium assets while also boosting production of the battery metal as the world transitions away from fossil fuels. The move into the lithium market represents a significant shift for Codelco, which has traditionally focused on copper production.

BHP Abandons $50 Billion Takeover Bid for Anglo American

$BHP Group Ltd (BHP.AU)$, the Australian mining giant, has abandoned its proposed $50 billion takeover bid for $ANGLO AMERICAN (AAUKF.US)$ after failing to convince the London-listed rival to engage in further talks. The proposed deal would have been the largest-ever mining deal, but the two companies were unable to agree on how to handle regulatory risks and costs generated by the acquisition.

Rio Tinto Secures 20-Year Power Supply Deals to Keep New Zealand's Tiwai Point Smelter Operational

$Rio Tinto Ltd (RIO.AU)$, the biggest energy user in New Zealand, has announced new 20-year power supply deals that will keep the Tiwai Point aluminum smelter operational in the long term. The smelter, which has been in operation for around half a century and employs around 1,000 people full time, accounts for approximately 13% of the country's energy demand.

New Zealand Aluminium Smelters, which is majority-owned by Rio Tinto, has signed contracts with three local generators to set pricing for 572 megawatts of electricity. These deals are expected to begin in July and run until at least 2044, ensuring the continued operation of the Tiwai Point smelter.

Hammer Metals Grants South32 Option to Earn 80% Interest in Isa Valley Project

$Hammer Metals Ltd (HMX.AU)$, an Australian mining company, has entered into an option agreement with $South32 Ltd (S32.AU)$ that would allow South32 to earn an 80% interest in Hammer Metals' Isa Valley project in Queensland, Australia. Under the agreement, South32 can increase its interest from 70% to 80% by electing to free-carry Hammer Metals to the completion of a pre-feasibility study. The Isa Valley project is located in an area considered prospective for zinc and copper.