The maxim, half blessing, half curse, seems an apt summary of the present. From pig iron to nickel, aluminum to steel, US pricing has gone gangbusters once more on geopolitical events, supply chain strain, and general uncertainty.

Just as domestic markets were starting to settle from record price spikes in 2021 and the economy was adjusting to the realities of a post-pandemic world, inflation posted its most painful blow in the first quarter of 2022, Russia launched its invasion of Ukraine, and a new COVID-19 variant spread.

The confluence of factors is shaking markets. The biggest effects have come from the war between Russia and Ukraine.

The two countries represented around 62% of American imports of the iron product in the 2021, and the war has taken off a large household supply of the key steel feedstock for both US- and foreign-based steelmakers. EAF accounts for roughly 70% of US steel production.

US buyers have been forced to search for replacements for Russian and Ukrainian material since the February invasion, with Brazil winning the lion’s share of that business. The Platts Brazilian pig iron export assessment from S&P Global Commodity Insights doubled from January to mid-March, and it averaged more than $950/mt in early April.

China lockdown increases uncertainty

So the new COVID-19 outbreak in China has jumbled things up for America too.

Chinese aluminum smelters have been ramping up production in recent weeks after increases in both supplies of power and profits. Yet “zero-COVID” lockdowns in some of the country’s largest cities, including Shanghai, leave some wondering where the added output will go if consumer demand there is sullied.

But the lockdowns have rendered workforces in the world’s workshop largely homebound, and some factories have been ordered to close temporarily.

The measures related to COVID could mean steep drops in China’s imports in the near term, new supply chain disruptions, and a surge of goods looking to be transported away from warehouses and ports once restrictions ease.

Aluminum that is not going to be needed domestically in China will look for a home in other areas, undercutting tons from those other markets, creating a domino delivery principle that would add to volatility worldwide and in the United States.

Some see potential new macro global aluminum supply ending up on US shores and wonder whether that, coupled with the downstream demand shift or a potential tilt in US aluminum import duties status, could depress pricing and send market participants on a new kind of rollercoaster ride.

Indeed, with markets around the world more connected than ever, it’s safe to say that the blessing and curse of “interesting times” is going to be the condition in America for some time.