Aluminum confirmed its downtrend during the last trading sessions. The metal continues to decline today. Investors remain cautious as the global banking crisis might spread further. China does not add optimism, since it is likely to slow down its recovery given a weak economic backdrop.
China’s reopening in March proved to be lackluster. Business confidence has increased, with the housing market remaining strong. But the global outlook has deteriorated amid turmoil in the financial markets. Bloomberg's latest aggregate index of eight early indicators showed growth momentum steadied from February. A slump in auto sales and weak global demand have been the major headwinds to the index's growth.
Outperforming indicators point to continued weakness in the global economy. Earlier, South Korea's trade data showed a deepening downturn in exports. The figure appears to be a global demand barometer. Supplies fell by 23.1% for the first 20 days of March from the values recorded a year ago.
Primary aluminum production reached 5.273 million tons in February. It is 2.7% higher compared to the corresponding period of 2022. International Aluminium Institute (IAI) noted that the average output of the metal per day increased by 0.3% from January.
With lower energy prices, aluminum production is expected to pick up in the near term. On the other hand, demand could fall as the financial crisis unfolds.
Based on the technical analysis, the price of aluminum tested the global uptrend. A rebound took place thereafter, and the price moved lower again. This movement is also indicative of the local downtrend of aluminum. The price is likely to decline from the upper limit of the trend, back to the lower level. But there is another significant line, i.e $2,270. That's where the price had been trading for several days, before it reversed. That would be the downside target for aluminum. Stop-loss can be placed at the exit of the downtrend, which corresponds to the level of $2,380.
Aluminum is likely to decline:
Take profit – 2270
Stop-loss – 2380
This content is for informational purposes only and is not intended to be investing advice.