Markets
Chart Beat: Aluminium prices may take a while to shine
Summary
- Rising demand from green sectors offers a positive outlook, yet abundant supply suggests aluminium prices may not surge significantly
Aluminium prices on the London Metal Exchange have been confined to a range of $2,100-2,400 per tonne for months now, and will likely remain there for a while due to a slower-than-expected increase in demand.
This is when aluminium production is expected to see an uptick. Nuvama Research expects China, a key market for metals, to increase production by up to 4% in 2024 to about 43 million tonnes, which is within its capacity cap of 45 million tonnes. The broking firm also sees production rise in the rest of the world excluding China. As such, there is enough supply in the market to meet any increase in demand.
No doubt, the rising demand from the green sectors is encouraging. However, sufficient supply levels indicate that aluminium prices are unlikely to experience significant increases. Conversely, high production costs and low inventory levels are likely to prevent a substantial drop in prices.
