Metal prices get multiple shots in the arm
The combination of high alumina prices, positive sentiment in relation to the Chinese economy, the US$ index moving down, and small shortages of metal has seen metal prices rise to over RMB21,000/ tonne.
However, there are also signs that the price may have moved higher into the stratosphere. Traders are becoming concerned about entering the market at such a high price, while downstream factories are only buying bare minimums based on their order books.
While the price may further test new highs, it's becoming clear that there's not much oxygen at these levels. On the other hand, alumina costs will continue to push the metal, and there is some evidence of major houses taking positions to push the metal price up. That's happening in alumina too.
Overall, we think that the metal price will find a ceiling in the mid-21000 range, with the LME landing in about the same range.
Image credit: Trade India
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