Monthly Aluminum MMI® Increases 1.1% to 91, End Of Bear Market?

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The monthly Aluminum MMI® registered a value of 91 in July, an increase of 1.1 percent from 90 in June.

Aluminum_Chart_July-2014_FNLAluminum is finally showing some life. Meanwhile, the stock of aluminum related companies, such as Alcoa, is skyrocketing. It seems like high expectations on the future use of aluminum in automobile and aerospace sectors is making these stocks surge.

Until now, those expectations weren’t reflected in the price of aluminum but recently we can see that aluminum prices are showing some strength. Three-month aluminum closed last week at $1,925 per ton on the LME, and although it remains at low levels, that’s a 10 month high.

3M LME Aluminum price since 2011

3M LME Aluminum price since 2011

It is important to remember that aluminum has been in a bearish market since 2011 and buyers shouldn’t panic when fluctuations happen within a downtrend. However, this time seems different. Aluminum has stabilized for the  year and this is a typical behavior before the start of a bull market. Furthermore, other industrial metals such as nickel and zinc have already turned up this year and if they keep going up, aluminum should follow.

3M LME Aluminum since 2013

3M LME Aluminum since 2013

What This Mean For Metal Buyers

We believe that aluminum prices could finally rise this year. However, aluminum still remains at low levels and buyers should wait before taking long term positions. We would turn bullish on aluminum if prices near $2,000/ton, which would be the right time to hedge.

* Get the complete prices every day on the MetalMiner IndX℠

For the second month in a row, the price of European 1050 aluminum increased, rising 4.5 percent over the past month to $3,062 per metric ton. The cash price of primary Indian aluminum closed the month up 2.9 percent at $1.90 per kilogram. The aluminum 3-month price rose 1.5 percent over the past month to $1,884 per metric ton, the second straight month of gains. At $1,850 per metric ton, the cash price of primary aluminum increased 1.5 percent on the LME. At $3,507 per metric ton, the price of European 5083 plate finished the month 1.1 percent higher. This was the second straight month of declines.

The Chinese aluminum cash price remained essentially flat for the month at $2,145 per metric ton. Korean 3003 coil premium over 1050 sheet traded sideways last month, staying around $3.70 per kilogram. The price of Korean 5052 coil premium over 1050 sheet held steady around $3.84 per kilogram last month. Chinese aluminum bar held pat last month at $2,289 per metric ton. Last month was consistent for Chinese aluminum billet, which did not move from $2,190 per metric ton. Hovering around $3.65 per kilogram for the month, Korean 1050 aluminum sheet remained unchanged. Chinese aluminum scrap experienced a flat month, staying around $1,974 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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