Aluminum Price Forecast, November 2016: Prices Surging Over Chinese Stockpile

Aluminum prices are on the rise in a major way with a stockpile in the Chinese market leading the charge along with concern over an available supply shortage.

According to a recent report from The Wall Street Journal, aluminum futures hit a two-year high to close out October on the Shanghai Futures Exchange. The specific cause? Some analysts claim it’s the stricter Chinese road regulations with new weight limitations on trucks, which are delaying aluminum deliveries.

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Producers who rely mostly on trucks for aluminum delivery could see their costs rise as much as 30% for the time being.

“The longer this situation is unresolved, the more impact it’s going to have,” Michael Turek, head of base metals at BGC Partners in New York, told the WSJ. “Less aluminum is getting to where it needs to go.”

Smelters using trains as their primary method of moving aluminum are also facing issues, according to the WSJ.

“Loads of ingots are waiting at rail stations across the region, waiting for spare rail capacity to take them to markets in the south east and elsewhere,” aluminum consultancy AZ China wrote in a report Tuesday.

Aluminum Prices Hit 15-month High to Begin November

Our own Raul de Frutos wrote this week that aluminum prices hit even newer highs, rising above $1,700 per metric ton on the London Metals Exchange.

“Aluminum supply has increased this year as rising aluminum prices triggered release of new capacity and restarts of idled capacity. However, as we recently pointed out, there are other factors pushing aluminum prices up,” he wrote.

Those factors include rising energy costs and strong demand.

How will aluminum and base metals fare for the remainder of 2016 and into 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

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