Aluminum hits a fresh six-year low

Aluminium hits a fresh six-year low as spot aluminium closed at $1,442 per metric ton in the London Metals Exchange (LME) on October 26. Prior to this, spot aluminium made a closing low of $1,496 per metric ton on August 24. Of all base metals, aluminium looks the weakest as of now in the commodity marketplace.

Industry analysts attribute this price fall to global aluminium oversupply. Years of production cuts by major aluminium producers failed to restore the desired balance in the market. Aluminium production cuts by companies such as Rio Tinto (RIO) and Century Aluminium (CENX) have been counterbalanced by growing Chinese exports.

Aluminum demand strong

Aluminum demand, on the other hand, is stronger than most other industrial metals. Alcoa expects global aluminium demand to rise 6.5% year-over-year in 2015.

However, even strong demand fundamentals aren’t enough to support aluminium prices. Chinese aluminium exports seem to have taken the sheen off of aluminium.

Falling aluminium prices have badly affected Aloca's 3Q 2015 earnings. Alcoa closed at $8.77 per share on October 26, 2015, down more than 4% from its previous day’s closing. After the markets digested Alcoa’s lower than expected 3Q 2015 financial results, the downside in the company's share price resumed as aluminium prices continued to fall further.