Aluminium contract traded on London Metal Exchange fell 0.6 per cent to close slightly lower amid growing pressure on base metals following a rise in the US dollar value.
On Wednesday, US dollar gained strength following ADP’s positive private payroll data. As strong US dollar is negative for the dollar-denominated commodities prices of the base metals including that of aluminium on LME was weighed down due to decrease in demand from holders of international currencies. Aluminium remained range bound within $1614-$1643 per ton during Wednesday's trading. The commodity is meeting resistance at $1688 and finding support at $1592.
According to the market watchers, an uptrend is likely for aluminium in the coming weeks, as Chinese buyers will be locking in the white metal for October shipments.
Aluminium prices have bottomed out finally and shown improvement this year; but producers are expecting a steeper recovery. Going by the second quarter earnings results announced in recent weeks, the aluminium companies are still facing challenges with the current aluminium prices.
Century Aluminium’s Q2 earnings totalled at $326.8 million, down around 37.6 per cent YoY, while shipments of primary aluminium in the quarter were 185,567 tons, down roughly 20.7 per cent from 233,950 tons shipped a year ago.
Alcoa is currently undergoing a restructuring, spinning off smelting operations under the Alcoa name while value-added business focused on the aerospace and automotive industries, will operate under the name Arconic. Alcoa has also divested itself of 40 per cent of its smelting capacity. All these strategic moves have been made by the company to survive in the current volatile price environment.
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