On Thursday, the price of aluminum reached the highest value for the last three weeks. Due to the weaker US dollar, the metal became cheaper for other currencies’ holders, and its demand increased.
A decline in the US currency was caused by yesterday's publication of the country's inflation data. The consumer price growth unexpectedly decreased, and the market perceived it as a signal that the US Fed will soon suspend interest rate hikes.
Statistics from China, the largest consumer and producer of aluminum in the world, affect the pricing of the metal.
According to the Shanghai Metals Market (SMM), China's production of alumina, or aluminum oxide, fell to 6.46 million tons in June. This value is 1.22% lower than May's 6.54 million tons.
However, the resumption of smelters in Henan, Guizhou and Chongqing made last month's production figures more stable. The average daily output of the smelters was about 215 thousand tons.
China's alumina production fell by 4.2% in June year-on-year. This was due to a decrease in processing capacity in such regions as Shanxi, Henan and Inner Mongolia. The reason was the limited supply of raw materials.
In contrast, alumina output in Guizhou and Shandong provinces increased. In Heibei, the figure remained unchanged.
At the end of last month, China's installed alumina production capacity was about 100.25 million tons, while the operating capacity was 78.58 million tons.
New plants are expected to start up in July, boosting overall output levels. SMM estimates that the average daily output in China will be about 213 thousand tons and the operating capacity will be nearly 77.66 million at the end of this month.
Lower alumina production and lower annual rate indicate limited supply of raw materials. This raises the cost of aluminum.
The H4 timeframe shows the aluminum price has returned to the narrow range of 2190–2310.
The metal's price has broken out of the downtrend formed within the flat channel. The price is expected to move towards the resistance at the level of 2310.
Signal:
Short-term prospects for aluminum suggest buying.
The target is at the level of 2310.
Part of the profit should be taken near the level of 2265.
A stop-loss could be placed at the level of 2170.
The bullish trend is short-term, so trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
