South32 ‘care and maintenance’ of Mozal aluminium smelter next March fuels bullish sentiment in Europe

Fastmarkets12-17

Key takeaways: South32 will mothball its Mozal aluminium smelter in March 2026 due to failed electricity supply negotiations Mozal’s closure tightens Europe’s aluminium supply, boosting premiums for ...

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Europe\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-12-17 13:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fastmarkets.com/insights/south32-care-and-maintenance-of-mozal-aluminium-smelter-bullish-sentiment/><strong>Fastmarkets</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key takeaways:\n\nSouth32 will mothball its Mozal aluminium smelter in March 2026 due to failed electricity supply negotiations\nMozal’s closure tightens Europe’s aluminium supply, boosting premiums for ...</p>\n\n<a href=\"https://www.fastmarkets.com/insights/south32-care-and-maintenance-of-mozal-aluminium-smelter-bullish-sentiment/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0731783048.USD","symbol_name":"FIDELITY GLOBAL DIVIDEND \"A\" (USD) INC MONTHLY 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INC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","LU2237438978.USD":"Amundi Funds US Pioneer A2 (C) USD","LU2023251221.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AM\" (USD) INC","IE00BVYPNW00.USD":"GUINNESS GLOBAL EQUITY INCOME \"C\" (USD) ACC"},"translate_title":"South32明年3月Mozal铝冶炼厂的“保养和维护”激发了欧洲的看涨情绪","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CME":1},"content_text":"Key takeaways:\n\nSouth32 will mothball its Mozal aluminium smelter in March 2026 due to failed electricity supply negotiations\nMozal’s closure tightens Europe’s aluminium supply, boosting premiums for low-carbon, duty-free aluminium\nAsia faces increased competition for aluminium as Europe seeks replacements, pushing Japanese premiums higher\nAlumina oversupply in the Pacific grows as South32 redirects Worsley refinery output, pressuring prices downward\n\nAustralian producer South32’s decision to to place its Mozal aluminium smelter in Mozambique “on care and maintenance on or around March 15, 2026,” is likely to further tighten aluminium supplies in Europe and lead to higher prices, market participants told Fastmarkets on Tuesday December 16.\nSouth32 said it made the decision after failing to reach a new electricity supply agreement with the Mozambican government, Mozambican power producer Hidroeléctrica de Cahora Bassa (HCB) and South Africa’s state-owned energy provider Eskom.\nThe miner said that it has not procured the raw materials, including alumina, that would be required to sustain aluminium production beyond March 2026.\nThe decision comes after months of negotiations between the parties, with South32 initially threatening to mothball operations in August 2025.\nSouth32 said that it still expects its share of Mozal’s aluminium production to be roughly 240,000 tonnes in its 2026 financial year – which runs from July 1, 2025, to June 30, 2026 – due to fewer pots being in operation because of its decision to stop pot relining in the run-up to March shutdown.\n“Throughout our engagements we emphasized that Mozal’s ability to continue operating depended on securing sufficient electricity at a price that allows the smelter to remain internationally competitive, South32 chief executive officer Graham Kerr said.\n“Unfortunately, the parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB,” Kerr added.\nBullish sentiment in Europe\nEuropean market participants said putting Mozal on care and maintenance would further exacerbate the structural deficit in the European aluminium market.\nMozal’s aluminium is sought after among European consumers because it is duty-free in the European Union (EU) and is also recognized as “green” or “low-carbon” because it uses hydroelectric power from HCB.\nWhen coupled with recent surge in US Midwest aluminium premiums and a strengthening Asian market, the likely loss of Mozal supplies could push European aluminium P1020A premiums higher, market participants told Fastmarkets.\n“Europe has already done a lot of preparatory work [in anticipation of losing supplies from Mozal. We will put out feeler offers to see if we can achieve higher levels for our low-carbon units,” a European trader said, reporting their updated offer at $340 per tonne in-whs Rotterdam for P1020 ingots.\nFastmarkets’ twice-weekly assessment of the aluminium P1020A premium, in-whs dp Rotterdam was $315-345 per tonne on Tuesday December 16, up from $310-$340 per tonne on December 12.\nThe LME aluminium cash price was $2,833.50 per tonne on December 16, rangebound on day from $2,841.00 per tonne on December 15.\n“I cannot see a reason to be bearish on premiums now,” a second European trader said, “The US and Asian markets are strong, and ingots were already being sent from Rotterdam to the US before this [Mozal] news.”\nSources reported chatter of large volumes of metal being loaded in Rotterdam to be sent to the US in recent weeks, attracted by record-high US Midwest premiums, which have soared since US President Donald Trump’s imposition of 50% tariffs on all aluminium imports into the US on June 4.\nFastmarkets assessed the daily aluminium P1020A premium, ddp Midwest US, at 90-91 cents per lb on December 16, up from 87.50-88.50 cents/lb one week earlier.\n“People are trying to figure out if it’s a negotiation tactic again [by South32 to secure a power supply agreement], but I feel like this is the real deal,” a third European trader said.\n“Plus, metal is already flowing back to the US from Rotterdam and that tells you all you need to know,” the trader added.\nA deficit of “green” low-carbon P1020 ingots in Europe was already anticipated after Century Aluminum announced that it would be operating its Grundartangi smelter in Iceland at reduced capacity for 11-12 months, following an electrical equipment failure in October.\nCoupled with the Mozal news, market participants said they now expect the Europeans to import larger volumes from Asian producers, which may have higher Scope 1 (direct) carbon emissions and are likely to face higher EU Carbon Border Adjustment Mechanism (CBAM) certificate costs from January 1.\n“It is true the European markets have already started to purchase replacement tonnes from Asia, but are these the tonnes Europe wants? I think premiums will grind higher from here,” the third trader told Fastmarkets.\nThe European aluminium market is expecting increasingly punitive CBAM benchmarks and default values, which suggests CBAM certificate costs will be higher than initially expected when preparing for CBAM’s definitive phase, which begins on January 1, 2026.\nThe Chicago Mercantile Exchange’s (CME) aluminium European premium duty-paid futures contract, which settles based on Fastmarkets data, saw several strip trades conclude at higher levels for the first and second quarter 2026, at around $330-340 per tonne on December 16 – higher than the previous contract settlement price on December 15 of around $319 per tonne for January-June 2026.\nMozal mothballing to support Asia premiums\nAlthough Mozal units traditionally flow into Europe, rather than to Asia, there could be increased competition because units will be required “to fill the gap from Mozal” resulting in “fewer tonnes [being] available for Asia,” market participants said.\nInitial producer offers to supply aluminium to the main Japanese ports (MJP) in the first quarter of 2026 stood at $190-203 per tonne, sharply above the settled fourth-quarter 2025 premium of $86 per tonne and with a wide gap between buyers and sellers.\n“The Mozal news strengthens the producers’ position,” another trader said.\nAnd sources also raised the possibility that producers might raise their offers during the quarterly MJP negotiations.\n“The MJP is likely to go up even more. Pressure from the suppliers will increase, but many participants will have already factored this in,” a fifth trader said.\nThe spot MJP premium rose in the week on the back of bullish sentiment, despite limited spot activity on a CIF MJP basis, with the focus firmly on quarterly negotiations.\nFastmarkets’ daily assessment of the aluminium P1020A (MJP) spot premium, cif Japan was $140-160 per tonne on Tuesday, unchanged since Friday, but up from $120-130 per tonne on December 9.\nAlumina supplies expected to increase in the Pacific\nSouth32’s decision on Mozal will also have an impact on the already oversupplied alumina market in the Pacific, market participants told Fastmarkets.\n“The alumina supplied from our Worsley Alumina refinery [in Australia] to Mozal will be sold to third party customers [and] South32 has secured options with customers to sell this alumina at index-linked prices,” South32 said.\nA trader said: “[South32 has] sold some [Worsley] alumina under contingent deals, but so far most has been going to Mozal. [But] in a month from now we’ll see more Worsley alumina coming into the spot market.\n“If this is true, we’ll see the alumina market get longer by a million [tonnes],” the trader added.\nPacific alumina prices have declined steadily since the highs seen in December 2024, after which new Indonesian refineries, with extremely competitive margins, have generated a huge oversupply of low-cost alumina, sources said. \nAnd smelters have been unable to take in the surge in supplies, while also facing production cuts of their own, leading to a large surplus and depressed prices.\nFastmarkets’ daily calculation of the alumina index, fob Australia was $309.17 per tonne on Tuesday, down by $5.36 per tonne from $314.53 per tonne a week earlier – and down sharply from a record high of $805.83 per tonne on December 5, 2024.\n“With the alumina price clearly under a great deal more downward pressure, it could technically affect the LME aluminium price from advancing any higher,” Fastmarkets analyst Andy Farida said.Fastmarkets assessed alumina prices at 10.7% of LME aluminium prices on December 16, compared with 30.8% of the LME prices on December 5, 2024 – the all-time alumina index high.\n“The question is whether the alumina price will rise to catch up with the LME aluminium price,” Farida added. “Or will LME aluminium be the one that starts to curl down?”","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.12","shortVersion":"4.35.12","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2592747914","isCrawlerRequest":true}