Speculative funds activate LME aluminum

Some European aluminum smelters are facing closure --- UK Standard Bank --- In order to activate previously oversold, speculative traders technically chased up, so that commodity aluminum performed well last week. On Friday, the London Metal Exchange's (LME) 3-month aluminum closed at $1,840/ton, which was $56 higher than the previous week. The newer PMI shows that industrial output has improved in the summer, which has helped aluminum metal prices rise. However, we believe that industrial output must be significantly improved, and high oil prices and their negative effects on economic growth are still a major obstacle. Last week, news that a series of smelters in Germany faced closure led to the purchase of speculative funds, and until the dollar strengthened, the aluminum price continued to rise. Consultations on the reduction of electricity bills at the Hamburg Aluminium Plant, Stade and Voerde are still ongoing. Due to the reduction in the US trade deficit in May, the US dollar rose against the euro. Due to the strength of the US dollar and the impact of the poor fundamentals, LME's 3-month aluminum price was weak during May and June, mainly trading in the range of $1,700 to 1,800/ton. However, the market has already appeared oversold, and aluminum prices have made outstanding corrections with good low-price buying and short-selling, and reached the price of more than 1,800 US dollars/ton in the first two months of July on the 11th. Improvements in the outlook for the US economic outlook and the fact that some smelters in Europe are facing closure have aroused the interest of buyers. In the earlier period, some shocks to the $1800/ton ended in failure, and suffered a strong decline in this position. Therefore, if the impact on this price is successful, the trend will become positive. However, the fundamental situation is not the same, at least in the short term. Disappointing consumer demand since the start of the year is a potential short-seller factor, which is mainly reflected in the reduction of spot premiums from various regions. In the Midwestern United States, local production of major mines has risen significantly in recent months. This is mainly due to the restart of Massena's two smelters, the Wenatchee and Becancour mines, and the capacity expansion of the Alouette mine. In addition, due to the increase in the amount of aluminum metal flowing into the region attracted by high prices in the first half of the year, inventories remain high. However, the demand from metal semi-processing plants is still good. We expect the market will experience a recovery trend after the traditional summer off-season, especially considering the rebound in construction industry demand and the recent data from the American Institute of Supply Management (ISM). Improvement is a factor that will ensure that industrial output will increase later this year. In any case, for now, the spot premium has fallen to such a low level that it has been difficult to attract imports into the United States, which will have a potential impact on the European spot supply situation. With more arrivals in the future, with the increase in Russian supplies and light regional demand, the European spot premium will also decline. Japanese spot premiums follow the declining trend in Europe and North America. Excerpt: Business Finance Daily