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Aluminum Prices Slightly Higher – Rusal Forecasts Continued Stability

Tuesday, Sep 27, 2016

Aluminum futures were trading slightly higher on Wednesday, with a retreat in the US dollar encouraging purchases of the metal. The US currency was lower on Wednesday as the Fed concluded its latest two-day policy setting meeting, leaving rates unchanged.

After five challenging years, aluminum prices have found some stability, with the market finding some balance on expectations for a global deficit. According to Russian aluminum giant Rusal, the global aluminum deficit will be 700,000-800,000 metric tons this year, as production stabilizes. The International Aluminum Institute estimated that global aluminum production fell by 1.2% to 33.12 million metric tons in the first seven months of this year, the first year of consistent aluminum output declines since 2009.

Rusal expects that aluminum prices will stabilize in the $1,600 – $1,700 per metric ton price range next year, but the company has put a lot of conditions in this forecast. They see that as the price range for aluminum provided China does not increase production, demand for aluminum grows, and global stocks keep falling.

Meanwhile, the aluminum market may be showing signs of stabilizing, but there are considerable discrepancies among countries. In the US and Europe the markets are improving, as evident from the stabilization of physical aluminum surcharges, but aluminum supplies remain plentiful in Japan, South Korea, Malaysia, India, China and the Middle East.

Aluminum was recently up 0.5% at $1,583.75 a metric ton. Trading has been tight recently, with first support at $1577.84 and first resistance at $1,588.90, although technical indicators are supporting more buying momentum.

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