Writing in The Aluminum Association’s Aluminum Highlight’s newsletter he states that the first is the 9.0 earthquake and resulting tsunami in Japan.
The second is the continued political upheaval in the Middle East and Northern Africa (MENA), where there is increasing concern that the unrest could spill into Saudi Arabia from Bahrain, and U.N. airstrikes have started in Libya.
These events have had, and will continue to have, ramifications in the commodity markets. The situation in Japan will likely have a short-term negative impact on aluminium demand (mostly from the automotive sector) and a positive impact on oil demand (as a replacement for lost nuclear capacity).
On a y-on-y basis, industry data from February has been positive, with net new orders for aluminium mill products increasing by 15.3% and IAI daily production (ex-China) increasing by 7%. In China, exports of aluminium decreased by 90% y-o-y, while production increased by 12%, suggesting that domestic metal is being consumed in order to meet demand instead of being exported.
This places more pressure on global LME warehouse and producer stocks. Inflows of aluminum into LME warehouses were down by 48% in February from January, as less metal found its way into the warehouse and likely into the hands of consumers.