Alcoa Inc Stock Still Roaring, Monthly Aluminum Price Index Follows Suit

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As Alcoa Inc‘s stock price continues to climb, MetalMiner‘s monthly Aluminum MMI® registered a value of 95 in August, up significantly from July’s value:

Aluminum_Chart_August-2014_FNL

Compare with last month’s trends – here’s our free July MMI® Report.

Aluminum made a bullish move as it hit in July a new 17-month high at $2,039 per ton. Aluminum finally hit our target price as we were expecting in our last report.

The move doesn’t come as a surprise to us. In June, we pointed out that the stock of aluminum-related companies, such as Alcoa, was skyrocketing due to high expectations on the future use of aluminum in automobile and aerospace sectors. Watching aluminum-related stocks rising while aluminum prices remained low was an uncommon divergence that we expected to converge at some point.

Aluminum ETF (in green) catching up with Alcoa Inc (in blue)

Aluminum ETF (in green) catching up with Alcoa Inc stock (in blue)

Alcoa’s stock price has more than doubled since its low at the end of 2013, while the general market is barely up since the beginning of 2014. The second quarter of 2014 was a good quarter for industrial metals and aluminum in particular.

The fundamentals remain positive for aluminum, while stronger demand from China is helping push industrial metal prices up. The only concern we see now is the strength of the US dollar which could be negative for aluminum and the rest of the base metals sector.

What This Means For Metal Buyers

Aluminum has more room to go up. For the first time since 2011, aluminum seems to be acting like a bull. We would recommend aluminum buyers be hedged on aluminum as we might see prices going higher through the rest of the year.

This Month’s Exact Prices

Following a 9.0 percent upswing on the LME, the cash price of primary aluminum closed the month at $2,016 per metric ton. After rising 7.2 percent, the 3-month price of aluminum finished the month at $2,020 per metric ton on the LME. The cash price of primary Indian aluminum rose 6.9 percent over the past month to $2.01 per kilogram. Following a 6.5 percent change in price, European 5083 plate closed the month at $3,653 per metric ton. The cash price of Chinese aluminum reached $2,256 per metric ton after a 4.7 percent increase. The price of European 1050 aluminum increased 1.7 percent to $3,046 per metric ton.

Last month was consistent for Korean 3003 coil premium over 1050 sheet, which did not move from $3.62 per kilogram. Korean 5052 coil premium over 1050 sheet experienced a flat month, staying around $3.77 per kilogram. Last month was consistent for Chinese aluminum bar, which did not move from $2,300 per metric ton. Chinese aluminum billet held pat last month at $2,201 per metric ton. Hovering around $3.57 per kilogram for the month, Korean 1050 aluminum sheet remained unchanged. Chinese aluminum scrap experienced a flat month, staying around $1,984 per metric ton.

Don’t forget to read July 2014 MMI analysis before August’s full report comes out next week!

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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