The aluminum price closed yesterday's session on the profit side. The rebound in quotes occurred amid optimism about the increase in the government debt ceiling and prevention of the U.S. default. A number of positive economic data also provided support.
Aluminum rose by 1.55%. Aluminum production capacity in China is continuing to grow. The cost of production fell due to cheaper electricity for the smelting plants.
According to a report by China's General Administration of Customs, the country's industrial companies exported 461.8 thousand tons of raw aluminum and aluminum products in April of this year. This figure decreased by 7.2% in comparison to the previous month and by 22.6% in comparison to April 2022. Chinese aluminum exports fell by 17.2% in the first quarter of this year against the same period of the previous year, its total volume amounted to 1.84 million tons.
Since the beginning of last Fall, Chinese companies have been gradually reducing shipments of crude aluminum and aluminum products. This trend is related to the unfavorable external economic situation. A lot of aluminum producers in China have found that it is more profitable to use their products in the domestic market. Thus, they prefer to limit exports and meet domestic demand.
A decline in exports could lead to a reduction in supply on world markets. If demand for the industrial metal remains stable or increases, the limited supply could lead to higher aluminum prices.
The aluminum price broke out of the downtrend in the H1 timeframe, forming a new trend.
The curve of the Relative Strength Index indicator (standard values) shows convergence relative to the price chart, which confirms the rising nature.
In terms of wave analysis, the price is in the process of the third ascending wave formation on the M30 timeframe. The breakout of the top in the first wave at 2374 has already happened, so the upside potential may increase soon.
The nearest support is at 2333.
The short-term prospects for aluminum are to buy.
The target is at the level of 2373.
Part of the profit should be fixed near the level of 2333.
The stop-loss is at the level of 2245.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.