Aluminum price drifts to 18-month low ahead of U.S. rate hike decision

Sep. 21, 2022 8:21 AM ETAlcoa Corporation (AA), LMAHDS03:COMCENX, CSTM, ARNC, JJUBy: Carl Surran, SA News Editor

Billets of aluminium in the factory. The Hall–Heroult process produces aluminium with a purity of above 99%. Further purification can be done by the Hoopes process.

Funtay/iStock via Getty Images

London aluminum prices fell Wednesday to their lowest since March 2021, as markets braced for another substantial U.S. interest rate hike that will suppress economic growth.

The U.S. dollar has pushed to a 20-year high, which pressures dollar-priced metals by making them costlier for buyers with other currencies.

According to Reuters, benchmark aluminum (LMAHDS03:COM) on the London Metal Exchange recently was -1.3% at $2,215.50/metric ton and has slumped 21% YTD; other metals were mixed Wednesday on the LME.

Potentially relevant tickers include (NYSE:AA), (CENX), (CSTM), (ARNC), (JJU)

High energy costs have forced European aluminum smelters to slash 1.1M tons of annual production capacity, and some Chinese smelters face energy rationing, yet global aluminum output rose 3.5% Y/Y in August to 5.89M tons, according to the International Aluminum Institute.

Alcoa (AA) has entered a difficult phase of the economic cycle, but beyond the doom and gloom is a "huge bull case," Leo Nelissen writes in a bullish analysis newly published on Seeking Alpha.

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