Aluminum MMI: Aluminum Prices Drive MMI to 5-Year High

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The Aluminum MMI increased two points this month, reaching 99 points.

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Stronger LME and Chinese primary cash prices led to the jump. This month’s index reading brings the highest MMI reading of any index since January 2012, when MetalMiner launched the MMI series of indexes.

Source: MetalMiner analysis of FastMarkets

Upward price momentum may have slowed slightly, but the bullish run appears sustainable. We could expect additional upward movements.

The U.S. Department of Commerce imposed preliminary duties against aluminum foil imports from China. These duties range from 96.81-162.24% and apply to all aluminum foil products from China. The Chinese government requested consultation with the World Trade Organization (WTO) on  Nov. 3, claiming that the U.S. is using an expired 2001 clause.

China’s Ministry of Commerce said on Tuesday: “Regrettably, the United States has ignored the expiration of Article 15 … and still persists in its erroneous practice of continuing to use the ‘third country’ method in its anti-dumping investigations on imported products of China in violation of its obligation to WTO rules.”

Of course, China does not have market economy status, so the Department of Commerce will likely not agree with China’s Ministry of Commerce.

Oil, Gasoline Prices

Oil prices have already jumped in November, moving above levels that signal a bull market to MetalMiner. Oil prices hit a two-year high and currently trade over $55/barrel. The latest uptrend reveals strength in the latest oil rally.

Source: MetalMiner analysis of StockCharts

Since oil prices serve as one of the most important contributors to the CRB (commodities) index, we expect continuous upward movements for the index. Therefore, the case for a bullish commodity  — and industrial metals market, too — appears to have strengthened despite the latest short-uptrend of the U.S. dollar (dollars and commodities tend to move inversely).

Gasoline prices also increased with oil prices. MetalMiner previously analyzed the correlation between gasoline prices (and oil prices) and increasing base metal prices, specifically aluminum. When oil (and gasoline) prices increase, aluminum prices tend to follow. The degree of the increases does not always correlate, but aluminum prices tend to move together with the commodity.

Source: MetalMiner analysis of StockCharts

What This Means for Industrial Buyers

Aluminum showed resilience this month, maintaining its trend in the bullish market. Increasing oil prices also support the bullish case for aluminum. Therefore, adapting the right buying strategy becomes crucial for reducing risks.

MetalMiner released its longer-term annual outlook back in October. Readers can grab a free copy here.

Free Sample Report: Our Annual Metal Buying Outlook

Actual Aluminum Prices and Trends

LME aluminum prices increased this month by 1.1%, with a closing price in October of $2,166/mt.

The Korean Commercial 1050 sheet price increased this month by 2.4% to $3.40/kilogram.

Chinese aluminum primary cash increased by 0.35% to $2,433.50/mt, while China aluminum bar decreased by 2.77% to $2,578.24/mt. India primary cash increased by $0.04/kilogram to $2.16/kilogram.

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