Aluminum Price Soars: Are Supply Worries Fueling the Surge?


Aluminum Price Soars: Are Supply Worries Fueling the Surge?

Aluminum price rose on Wednesday, driven by concerns over potential supply tightening in the European Union if the bloc bans Russian aluminum imports. Momentum-following funds boosted buying activity.

Three-month aluminum on the London Metal Exchange (LME) rose 1.7% to $2,602.50 per metric ton by 1706 GMT, after hitting $2,607, its highest since Dec. 16. On the Multi Commodity Exchange (MCX), aluminum gained 1.15% to ₹249.80.

Reuters reported that the European Commission plans to propose a ban on Russian aluminum imports in its next sanctions package over the war in Ukraine. Russian supplies account for 6% of the EU’s aluminum imports, according to Alastair Munro, senior base metals strategist at Marex.

The discount for LME cash aluminum against the three-month contract narrowed to $13.50 per ton, a three-month low, signaling concerns about nearby supply.

In the copper market, U.S. Comex copper futures continued trading at a $464-per-ton premium to LME copper, fueled by expectations of import tariffs promised by U.S. President-elect Donald Trump. LME copper rose 0.3% to $9,183.50 per ton, while Comex copper futures gained 0.8% to $4.376 per lb ($9,647 per ton), hitting their highest levels since December and November, respectively, following U.S. inflation data.

U.S. commodities are pricing in a 45-55% chance of a 10% tariff on critical minerals or broader imports. On the supply side, heavy rainfall temporarily closed a key South Africa-Botswana border crossing, affecting copper shipments from Zambia and the Democratic Republic of Congo to ports.

China’s economic stimulus measures also supported metal prices. Aggregate financing and new yuan loans exceeded expectations in December, reflecting improved credit demand after monetary easing. Beijing’s decision to end tax rebates on semi-manufactured aluminum products further supported demand for aluminum outside China.

Meanwhile, easing geopolitical risks emerged as Israel and Hamas agreed to a ceasefire to end the 15-month Gaza conflict.

Technical Outlook – Aluminum Price

Aluminum prices surged to a one-month high of 250 before settling at 249.80, up 1.15% from the previous close of 246.95.

The technical chart indicates a strong breakout above multi-week resistance, forming a bullish candlestick pattern. Additionally, the RSI has given a bullish crossover, signaling further upward momentum.

However, prices must sustain above 250 to target 255-₹258 and beyond. Any short-term dip to 246-245.50 is likely to attract buying interest, with a stop-loss below 242.20.

Until then, Happy Trading!

Commodity Samachar Securities
We Decode the Language of the Markets

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