TOn spring 2020, the “Ring”, the famous auction house of the London Metal Exchange (LME), in London, was on the ground. Destroyed by the coronavirus crisis. An event in the world of markets, the venerable British enclosure having never closed since the Second World War. After months of suspense, during which the LME switched to fully digital transactions, the ring of red sofas regained their audience on Monday, September 6. Brokers have given voice to trade in copper, tin or aluminum.
When the “Ring” was muted, the brass sounded the tocsin, giving the the to other metals rolled by the inexorable advance of the Covid-19 pandemic. The price of aluminum was encumbered and amounted to nearly $ 1,500 (approximately € 1,300) per tonne. The sudden slowdown in the economy was causing raw materials to plummet. Eighteen months later, the decor is identical, but the change of tone, radical. While some are seeing a drop in trading volume, brokers are heating up and rekindling the flame of speculation.
Aluminum triumphs on the “Ring”. On Wednesday, September 8, a ton of light weight metal broke the $ 2,800 mark. Its highest level since 2008. This represents a spectacular increase of nearly 90% since its air gap following the health crisis. To understand this surge, we must turn to Guinea.
Investor concern
This small West African country is full of minerals, especially bauxite. Its basements would contain about a quarter of the world’s reserves. However, alumina is extracted from this red rock, which is then transformed into aluminum. The overthrow of President Alpha Condé followed by the takeover of power by the putschists on Sunday, September 5, raised concerns among investors about the international supply of bauxite.
If this political event contributed to the overheating of the shiny metal, its upward trajectory had started long before. The economic recovery after the shutdown caused by the coronavirus gave raw materials a second wind. Aluminum has benefited from a flashback. Especially since this metal appeals to many industrialists and asserts itself as one of the tools of the energy transition. At the same time, China, which supplies 60% of global volumes, has restricted its production. The aluminum, caught in a vice, flames.