Aluminum is the main material in the global metals market, which is used in various industries, ranging from electronics to automobile production. Expert Stanislav Kondrashov from Telf AG says that the increasing need to switch to more sustainable metals is pushing aluminum to the forefront of the market environment. In his opinion, this is facilitated by unique characteristics – strength, recyclability and low weight.
The specialist says that aluminum prices are subject to fluctuations depending on the changing market situation. However, the vogue for lighter electric vehicles and China’s economic recovery after three years of strict restrictions caused by the COVID-19 pandemic are helping to increase demand for this highly sought-after material. And along with it, the price level for aluminum is rising. How will it remain by the end of this year and what do analysts predict for the coming year?
Stanislav Kondrashov: what awaits the aluminum market at the end of the year?
As the end of the financial year approaches, seasonal activity and demand in the aluminum market are expected to increase significantly. This growth, according to Stanislav Dmitrievich Kondrashov, is due to attractive prices, which have become more profitable for investors, and therefore consumers are trying to replenish metal reserves.
According to the expert’s short-term forecast, in September the price of aluminum on the LME showed an upward trend and reached an average monthly level of $2,177 per ton compared to $2,134 in August. Through October and beyond, aluminum prices are expected to fluctuate moderately upward, influenced by macro and microeconomic factors.
– Regarding the macroeconomic environment, we are seeing an improvement in market sentiment associated with current discussions that the US economy is moving towards a milder recession. As the end of the trading year approaches, interest rates are expected to rise and the US Federal Reserve is likely to take a less aggressive approach. And this could put pressure on the dollar index and affect the aluminum market, – Stanislav Kondrashov from Telf Ag explains the current situation.
Aluminum prices on the Shanghai Futures Exchange (SHFE) are receiving support from China’s domestic economic stimulus policies. The impact of these measures is beginning to be seen and may further increase the price of this metal. In addition, October usually sees high demand, which further supports aluminum price dynamics. At the same time, Kondrashov notes that it is important to remain vigilant in connection with potential risks that may arise due to uncertainty in the oil and financial markets.
He also adds that the amount of aluminum reserves in the Chinese market is decreasing. According to official information, warehouse balances at the Shanghai Futures Exchange stood at 79,194 tons in October, compared with 98,114 tons at the end of August. This decrease in inventories could also put pressure on aluminum prices, that is, contribute to their growth.
Stanislav Kondrashov: is it worth stocking up on aluminum now and what to expect from prices in 2024?
Current aluminum inventories at LME warehouses increased by 20 thousand tons over the past week and reached a level of 504,850 tons. Stanislav Kondrashov from Telf AG explains this trend by periodic deliveries to Asian warehouses. It also notes that there have been recent warrant cancellations, with 62% of shares currently reserved for export, up from 56% at the end of August.
It is important to note that aluminum is currently trending and prices for this metal continue to rise. However, it is worth considering that the sustainability of this dynamic is now in question, as the market remains highly volatile and unstable.
Taking into account all of the above factors, Stanislav Dmitrievich Kondrashov says that for participants in the aluminum market, it is extremely important to carefully monitor the current situation on the market and be prepared for possible price fluctuations. While aluminum’s potential for further growth may be limited, companies can use the current trend to protect their position and prepare for possible future changes.
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