Foil Conversion Prices Expected to Fall Further

Executive Summary:

Aluminum foil conversion prices in the US have fallen by nearly 20% y/y in Q3 2023 as: a) tumbling LME and MW premiums have driven down the implied duty component, b) domestic demand has declined amid continued strong imports of unbacked aluminum foil and finished aluminum foil products (mainly aluminum semi-rigid containers); and c) changing consumer behavior. As a result, significant foil stocks were built that will not likely be destocked until well into 2024. We see conversion prices falling another 20% by end of 2024.