The Aluminum Monthly Metals Index (MMI) rose 4.8% following two consecutive months of decline.
After a sharp 7.6% drop in the early days of November, prices appeared to have found a bottom and formed a bullish “cup and handle” technical pattern around the summer support levels.
Aluminum prices have broken out of the bullish pattern and now seek new resistance levels on the smaller time frames. The October high will serve as the price target on the longer time frame for this newly confirmed price reversal.
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Europe’s energy crisis shutters production
The European energy crisis remains bleak, as the aluminum sector sees further casualties.
Our own Stuart Burns noted last week that Europe’s largest (Aluminum Dunkerque Industries France) and second-largest (Alcoa’s San Ciprián) smelters saw production derailed as energy prices surged.
The cuts continue to roll in.
Most recently, Norsk Hydro’s Slovalko smelter will drop production to 60%. This cut, which equates to roughly 35 thousand mtpa, follows a previous cut which had lowered production down to 80% in 2019.
Soaring energy prices throughout Europe have eroded smelter profitability. Those smelters that rely upon long-term energy supply contracts and renewable energy, including hydroelectric capacity, have remained largely sheltered from the closures and cutbacks.