Monthly Aluminum MMI® Holds Steady at 89, Prices Still Low: Don’t Go Long

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The monthly Aluminum MMI® registered a value of 89 in May, on par with April’s value.

Aluminum_Chart_May-2014_FNL

With aluminum prices remaining low and the MW premium high, we will keep an eye on the new CME aluminum futures contract. Aluminum buyers might want to be aware of future developments and consider using these contracts as hedging instruments.

FREE Download: The Monthly MMI® Report – covering the Aluminum market.

Three-month aluminum closed the month of April at $1,812 per ton on the LME. Aluminum surged in the month of April, but we see that as a normal fluctuation within the overall downtrend. This week prices fell again below $1,800/t.

3M LME Aluminum Price since 2013

3M LME Aluminum Price since 2013. Graph by MetalMiner.

We would recommend buyers focus on the facts and not rely on what others say about price. At the end of the day, these are only opinions and more often than not, they are wrong. Aluminum remains in a falling market and nothing indicates that aluminum is turning up. Buyers should ride the trend and hedge/buy forward when the trend is actually changing.

Today, just as five months or two years ago, there is no need for buyers to take long-term positions. We would suggest buyers wait until the market gives bullish signals before making early decisions.

Aluminum 3M LME price since 2011.

Aluminum 3M LME price since 2011. Graph by MetalMiner.

What This Means For Metal Buyers 

Aluminum remains at low levels, but there are no signals of real price risk for 2014. We would recommend aluminum buyers keep riding the trend and not take long-term positions until prices break above $2,000.

Key Price Drivers

Following a 5 percent upswing, the Chinese aluminum cash price closed the month at $2,123 per metric ton. The primary aluminum cash price rose 2.3 percent on the LME over the past month to $1,769 per metric ton. On the LME, the 3-month price of aluminum increased 2.2 percent to $1,812 per metric ton. After a 1.2 percent increase, the cash price of primary Indian aluminum finished the month at $1.80 per kilogram.

Following a 11.3 percent decline in price, Korean 1050 aluminum sheet finished the month at $3.57 per kilogram. After falling 11.2 percent, Korean 3003 coil premium over 1050 sheet finished the month at $3.62 per kilogram. Korean 5052 coil premium over 1050 sheet prices dropped by 10.8 percent this month to $3.76 per kilogram.

European 5083 plate traded sideways last month, staying around $3,448 per metric ton. The price of Chinese aluminum bar held steady around $2,269 per metric ton last month. Chinese aluminum billet experienced a flat month, staying around $2,171 per metric ton. European 1050 aluminum held pat last month at $2,846 per metric ton. Prices for Chinese aluminum scrap remained constant this past month, holding at around $1,957 per metric ton.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends over a 30-day period. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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