Aluminum MMI: Prices Rise and Trading Volumes Have Strong Showing

After last month’s drop, the Aluminum MMI (Monthly Metals Index) index increased by three points for our January reading. The current Aluminum MMI index hit 98 points, 3.2% higher than the December reading. 
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In December, MetalMiner anticipated a rise in aluminum prices … and that is exactly what happened.
Aluminum prices increased by 10.6% in December, reaching a more than two-year high.

Source: MetalMiner analysis of FastMarkets

Trading volumes appear strong and accompany the current uptrend. Moreover, aluminum’s latest peak has climbed over previous ones, signaling strength in its latest market rally. Other macroeconomic indicators, such as a weaker U.S. dollar and a stronger CRB index driven by higher oil prices, may continue to support aluminum prices.
Moreover, the Department of Commerce’s Section 232 investigation should see a report released mid-January, which will also impact prices. The U.S. Department of Commerce announced a new self-initiated anti-dumping and countervailing duty investigation on imports of Chinese common aluminum alloy sheet at the end of November. The U.S. has launched several anti-dumping campaigns for aluminum products this past year.
Crude Oil
As oil prices serve as a critical part of the CRB index, together with other base metals, buying organizations need to monitor oil price trends.
Moreover, there are some base metals, such as aluminum, that are strongly influenced by oil prices.
Crude Oil prices. Source: MetalMiner analysis of Trading Economics

Oil prices have increased again this month. Current oil prices remain above our bullish level signal, meaning that we could  expect some more upward movement for oil.
Similarly, increasing oil prices will continue to provide support to base metals prices.
Aluminum Scrap
Chinese aluminum scrap prices increased sharply this month and appear in a long-term uptrend since 2016.
The latest rally in both LME and SHFE aluminum prices also results in a jump in aluminum scrap prices. Chinese scrap prices increased by 4.9% this month.
Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers
Aluminum prices jumped sharply again this month. After sharp price increases, base metal prices sometimes pull back to digest the previous gains. Aluminum prices may lack some price momentum this month, although that continues signaling bullishness for the light metal.
Therefore, adapting the “right” buying strategy becomes crucial to reduce risks by knowing when to buy.
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Actual Aluminum Prices and Trends
LME aluminum prices increased this month by 10.6%, with a closing price in December of $2,273/metric ton. Korean commercial 1050 sheet dropped 9.5% to $3.24/kilogram.
Chinese aluminum primary cash jumped by 4.4% to $2,258.75/metric ton and Chinese aluminum billet rose by 0.13% to $2,212.56. China aluminum bar decreased by 6.34% to $2,421.96/mt.
India primary cash increased by 9.26% to $2.24/kilogram.

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