The price of Aluminium on the London Metal Exchange (LME) rose above $3,100 per tonne at the end of January 2022. Aluminium gained more than 60% last year from $1960 per tonne in January 2021 and its price rose by 11% in the month of January alone, closing in on all-time highs.
But this February the metal’s price rolled back to $3000. Is it a downside trend or just a correction? The fundamental reasons behind this downfall may be explained below.
The major growth driver for aluminium prices over the last several months was the energy crisis that pushed energy prices sky-high in Europe and Asia. More than a half of global aluminium production is consumed by China and some 15% by Europe. The production of Aliminium is a very energy-demanding process. The cost of production is driven by the cost of energy, primarily gas or hydro-generation. Thus, high energy prices limit the production of aluminium along with the still rising costs. Such a double negative impact from the supply side pushes prices up.
Inflation pressures are pushing prices up from the demand side as the pandemic fades and business activity is restored. The wide use of aluminium in construction, the making of aircrafts and motor vehicles, in the food and beverages industry, the power industry, and in wiring is the major driver for demand.
Those factors are expected to continue to help prices rise but perhaps not so much as during previous months. Nevertheless, this may be enough to push the price to new record highs above $3,200 per tonne, recorded in October 2021.
The technical picture suggests that the price of aliminium is within the upward trend and it will stay there until the price slides below $2516 per tonne. The recent price correction may last until the $2750-2820 zone that is limited by support levels and the Fibonacci retracement levels on timeframes D1 and H4.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.19% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2023 Teletrade-DJ International Consulting Ltd
This website is operated by Teletrade-DJ International Consulting Ltd, which is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11. Teletrade-DJ International Consulting Ltd is located at 88, Arch. Makarios Avenue, 2nd floor, Nicosia Cyprus.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.
Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.19% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.