Aluminum has experienced a 5 percent increase in the month of April so far. The sharp move comes as a surprise for us. This type of short-term price fluctuation is very difficult to predict and it is hard to find fundamental explanations for it.
LME 3M aluminum price in 2014.
At this point, however, the move seems like a normal reaction that could resume in the overall downtrend, as we have seen in the previous years:
LME 3M Aluminum price since 2011.
We remain bearish on aluminum and we wouldn’t recommend buyers taking long-term positions in a falling market. Price fluctuations like those seen in 2011 and 2012 (yellow circles) can make buyers panic, creating bad purchasing decisions.
Copper, and the majority of metals, keep showing weakness. We would like to see further upside movement in aluminum prices to become bullish. Prices breaking above $2,000 per metric ton could be a good target for aluminum buyers to start increasing hedging positions.
What This Means For Metal Buyers
Aluminum still remains in a falling market. The recent price increase shouldn’t panic aluminum buyers yet. We would suggest waiting for price confirmation before taking long-term positions.