LME aluminum with signs of shortage

While the short sellers are gradually withdrawing from copper, the large investors in aluminum still remain extremely negative about aluminum, according to the LME. But in this case, one could say that "those who are said to have lived longer". Because we see it as a confirmation that the price downside potential of aluminum is very limited, because the risks are already discounted in the prices. However, the main reason for support remains the high production costs and the (partly self-imposed) trade barriers that limit availability. In this context, it would be interesting to learn more about the case in Vietnam, where, according to media reports, a large shipment of reclassified aluminum from China was recently confiscated by Customs. Allegedly, it is about 1.8 million tons of aluminum products, which were mainly intended for the US market. Due to the high US punitive tariffs, the "smuggling" can certainly make sense. However, in view of the gigantic size, one would need more information to classify it correctly. It was noticeable that the aluminum market on the LME fell into so-called backwardation for the first time this year, with the spot rate exceeding the LME standard three-month forward.

Source: Commerzank Research, Photo: Fotolia