The aluminium price has been the one of the best performers on the LME in 2016, second only to zinc. Prices have risen 11% since the first trading day of 2016 with current quotes well above the $1,620/t level. Indeed, since the start of April aluminium prices have gained roughly 6%. Investor confidence is being driven by a number of factors: A belief that prices were heavily undersold Q4 2015 and that retracement was inevitable; better expected demand in China on the back of stimulus measures aimed at shoring up infrastructure growth and a slow pace of production restarts. The rise in SHFE prices can largely be attributed to a heavy inflow of high velocity speculative money into the broader commodities market, particularly in steel rebar futures, dragging base metals higher. We continue to question the sustainability of recent price gains and believe that prices are reaching an overbought level with short term profit taking likely to drag prices lower over the coming month.
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As global demand weakens and commodity prices fall, we're seeing a challenging environment in the metals and mining industry. Mining companies are increasingly coming under pressure to reduce operating costs, causing many to shift their strategic planning, delay new investments and look to long-term future growth.
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Commodity market report | Apr 2016
Global aluminium short-term outlook April 2016
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