The aluminum price reacted modestly to U.S. macroeconomic conditions.
Specialists at Fastmarkets pricing agency presented their review of aluminum price dynamics this month.
Positive decision on the U.S. debt ceiling supported the market. But due to the continued unpredictability of the macro- and microeconomic prospects, the agency's forecast for aluminum in June and the coming months remains bearish.
Recently, there has been a significant increase in metal reserves. In 2023, their volume almost doubled, from 201 to 386 thousand tons. Nevertheless, this indicator is still below the normal.
The aluminum market is trying to find a balance between limited supply and weak demand. Steadily high inflation and the unfavorable economic situation in Europe are reducing the demand for industrial metal. Sellers are reviewing aluminum prices downward, giving discounts.
The exception is the automotive sector. The European Automobile Manufacturers Association (ACEA) reported an almost 30% increase in the number of passenger car registrations in the EU in March. This figure exceeded 1 million for the first time in 2 years.
However, strong figures for demand from the automobile industry could not compensate for the drawdown in the construction and other sectors. Therefore, the value of aluminum continues to decline.
In addition, the construction of the new plant could lead to an increase in alumina production and put pressure on aluminum prices.
The Aluminum Corporation of China (Chalco) is planning to build an alumina refinery in Republic of Guinea. The company will be part of the Guinea Alumina Corporation (GAC) project from the Arab Emirates.
Since the summer of 2022, Chalco has become the largest aluminum producer in the world. Chalco's total production capacity reached 7.5 million tons of aluminum per year.
Aluminum is near a five-week low. The price of the white metal is forming a triangle pattern on the H4 timeframe, which indicates the uncertainty of the market. The Relative Strength Index indicator (standard values) confirms the downward movement of the price in convergence. The most profitable point to sell is at the trend resistance of the triangle.
Signal:
The short-term prospects for aluminum are to sell near the level of 2245.
The target is at the level of 2190.
Part of the profit should be fixed near the level of 2215.
The stop-loss is at the level of 2270.
"Bearish" 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.
