The aluminum price has resumed the downward movement without having any clear trend.
BMI has revised its aluminum price forecast for this year downward to $2,500 per ton.
According to analysts, this year the prices are likely to be under pressure and will not return to the 2022 highs. Global demand for the metal remains weak, while China’s domestic supply is increasing.
Despite this, BMI expects a rise in prices from the current levels by the end of the year as the real estate sector in China recovers.
The aluminum price is likely to remain high in the long term. Demand for the metal is supported by the accelerating transition to green energy, while supply is limited.
As BMI specialists said, the prices are now under pressure. This is related to a slower-than-expected recovery in mainland China's manufacturing sector and weak domestic consumption.
Meanwhile, the country’s production is forecast to rise by 2.2% year-on-year to 40.9 million tons this year.
BMI expects that China’s increased production will be limited after 2025. This will help reduce the global aluminum surplus.
The general fundamental outlook might increase the downward movement of aluminum.
According to macroeconomic factors, the dollar is strengthening amid the drop in Consumer Confidence Index and market concerns about negotiations on the U.S. debt limit in order to avoid a default. The continuation of hawkish policy amid high inflation has heightened expectations of a recession in the U.S. The metal price continues to decline due to volatile demand in the domestic market.
The price’s exit out of the downtrend on the M30 timeframe outlined the formation of a new wave group.
The aluminum price is in the formation of the third descending wave. Breaking through the top of the first wave at the level of 2,185 will strengthen the price movement towards selling.
Signal:
The short-term outlook for aluminum suggests selling.
The target is at the level of 2,105.
Part of the profit should be taken near the level of 2,185.
The Stop-loss is at the level of 2,245.
Bearish trend is of short-term nature, so it is worth selecting the trading volume of not more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
