Material Trends and Price Points for Aluminum and Steel

Since the price surge in April for aluminum and June for steel, both have begun downward trends. The surge in prices was mainly due to the tariffs imposed by the US and the subsequent retaliations by other nations. After April, though, aluminum prices fell; that trend continued into July, but at a slower pace. On the other hand, steel continued to face rising prices in June, but has recently seen decreasing prices in July.

Many experts believe that the downward trend in the price of aluminum is due to the expectation that Rusal, the world’s second largest aluminum producer, will receive sanctions relief from the US. Because this is the expectation within the industry, the market has already seemed to adjust to it. However, there are those who believe the US will not grant relief to Rusal, as it could be a bad move politically. So, if sanctions relief does come for Rusal, the price effect will most likely be negligible, as the market had preemptively adjusted for it. However, if the relief does not come, the price can likely shoot up again, possibly upwards to $3000 per ton. There are some who believe the recent drop in prices has been caused by a general softness in commodity prices due to fears of a trade war, not an expectation that Rusal will receive relief.

The increasing price of US domestic steel has also recently started to slow down and even fall, signaling what may be an end an increasing price trend we have seen for much of the summer. It is forecast that global demand for steel will grow throughout the rest of 2018 and 2019, while steel supply has tightened recently. If supply continues to tighten, this could certainly cause a supply-side shortage, thus creating another price surge. However, it is not expected for the supply to remain tight.

Overall, the markets for aluminum and steel continue to face uncertainty. The rumors of sanctions relief for Rusal could have an effect on aluminum prices in the future. There is also uncertainty with future actions that the US or other countries will take in terms of tariffs. For now, all there is to do is wait and see what further actions are taken in the global economy, both politically and industrially.