09 FEBRUARY 2014agmetalminer.com
LME Aluminum Prices Plummet, Monthly Index at All-Time Low
Edited by : AL CIRCLE
2 min read
Our aluminum price index registered a value of 89 in February, a decrease of 3.3 percent from 92 in January.
The 3-month LME price closed on Tuesday at $1,686 per metric ton, the lowest level seen in the past 4+ years. Aluminum keeps struggling to reach previous peaks, but it doesn’t seem to have any problem with reaching new lows – a perfect definition of a downtrend.
We have been calling for lower aluminum prices in one of our recent MMI reports and this latest downward movement makes us even more bearish. Some have been arguing that prices were low and they couldn’t go even lower. We don’t share that opinion, and while the trend is in motion, we expect prices to keep going down.
An interesting fact is the divergence seen in Alcoa’s stock price and aluminum prices.
While they usually move together, since 2013, Alcoa stock has been trending higher while aluminum prices have been falling. This divergence might be explained by the fact that stocks keep reaching new highs, giving support to Alcoa’s stock value while a stronger dollar keeps pushing commodities (and therefore metal prices) down:
Finally, the fact that increased premiums have benefited producers such as Alcoa could help to explain this divergence.
What This Means For Metal Buyers
Until the scenario changes, a falling aluminum market might suggest anything but taking long-term positions.
Key Price Drivers
After rising the previous month, primary cash aluminum prices dropped 6.1 percent on the LME to $1,663 per metric ton.
A 4.3 percent drop over the past month hit Chinese aluminum billet. After rising the previous month, Indian aluminum primary prices dropped 4.2 percent. The Chinese aluminum cash price declined 4.0 percent. Chinese aluminum scrap prices fell 1.8 percent after rising the previous month.
The 3-month LME price closed on Tuesday at $1,686 per metric ton, the lowest level seen in the past 4+ years. Aluminum keeps struggling to reach previous peaks, but it doesn’t seem to have any problem with reaching new lows – a perfect definition of a downtrend.
We have been calling for lower aluminum prices in one of our recent MMI reports and this latest downward movement makes us even more bearish. Some have been arguing that prices were low and they couldn’t go even lower. We don’t share that opinion, and while the trend is in motion, we expect prices to keep going down.
An interesting fact is the divergence seen in Alcoa’s stock price and aluminum prices.
While they usually move together, since 2013, Alcoa stock has been trending higher while aluminum prices have been falling. This divergence might be explained by the fact that stocks keep reaching new highs, giving support to Alcoa’s stock value while a stronger dollar keeps pushing commodities (and therefore metal prices) down:
Finally, the fact that increased premiums have benefited producers such as Alcoa could help to explain this divergence.
What This Means For Metal Buyers
Until the scenario changes, a falling aluminum market might suggest anything but taking long-term positions.
Key Price Drivers
After rising the previous month, primary cash aluminum prices dropped 6.1 percent on the LME to $1,663 per metric ton.
A 4.3 percent drop over the past month hit Chinese aluminum billet. After rising the previous month, Indian aluminum primary prices dropped 4.2 percent. The Chinese aluminum cash price declined 4.0 percent. Chinese aluminum scrap prices fell 1.8 percent after rising the previous month.
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