LME aluminium futures surged on growing shortage concerns, pointing to $3,380 in the short term

2022-05-30 0 By

Aluminium prices in London have surged to a 13-year high as strong demand and a spate of smelter closures from China (CHN) to Europe raise the risk of shortages of the key industrial metal, according to MarketMatrix.net.Aluminum futures on the London Metal Exchange (LNG) rose as much as 3.3 percent to $3,236 intraday, surpassing an October peak and reaching their highest level since 2008.Prices of key raw materials, from nickel to natural gas and crude oil, have soared in recent months as consumption has risen sharply.As the world emerges from the COVID-19 crisis, supply has not kept up.Aluminium has been the best performer on the LME this year, with $3,380 the next target for bullish investors attracted by the rapidly tightening market.Aluminium prices hit their highest level since 2008 as inventories continue to fall as smelters in Europe struggle with an energy crisis and Supply in China tightens rapidly due to factors such as COVID-19, leaving the aluminium market at risk of a supply shortage as buyers quickly draw down stocks and push them to extremely low levels.Goldman Sachs says the industry will run out of visible global inventories by 2023.Goldman analysts, including Nicholas Snowden and Jeffrey Curry, said in an email: “We believe the aluminum market faces higher prices this year.The key property of physical scarcity gives it an upward bias, which creates additional price volatility across the economy.”As for the medium-term outlook, Kunal Sevelil, Kalkine’s chief executive, said: “Demand is unlikely to abate and supply pressures are unlikely to ease.In the medium term, aluminium prices are likely to stop as Russia-Ukraine tensions ease, but a sharp decline is unlikely.”Dong Li, commodity analyst at MarketMatrix.net, said: “For LME aluminium, which broke through last year’s multi-year high of $3,229 intraday, the short-term direction is pointing higher until meaningful resistance is encountered.It is worth noting that the metal is currently supported by a range of positives, with near-term risks being Russia-Ukraine tensions and the European energy crisis, both of which could reverse in the near term.”————— Market Matrix: Futures & Derivatives Trading Research Center – Find your best trading opportunities from our selected stream of top news sources like Bloomberg/Reuters /CNBC/WSJ!+++ Top investment banks macro/stock index/crude oil/gold research report and strategy!+++ Economic data/industry report in-depth interpretation!+++ Follow ++ View all resources