# Is Aluminum bullish?



## BREND (19 October 2007)

Aluminum had fallen from a high of $2870 in mid-July to $2375 in mid-September (down $495 in just 2 months’ time).
Currently a double-bottoming is forming, signaling that a possible reversal trend for this metal.

Evidences to supports the view that reversal trend is occurring:
a) Huge amount of cancelled warrants have been building up for the past few days, indicating rising demand for Aluminum at current price level.
b) Contango has shrank from 57 (early October) to 47 (mid-October), demand for physical has picked up.

Copper price has been weak lately, falling copper price may push aluminum price lower.

Aluminum price reaching $2450 - $2480 would be a good buying opportunity.

Full details here: 
http://basemetal-trading.blogspot.com/2007/10/buy-aluminum-on-dips.html


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## SGB (19 October 2007)

BREND said:


> Aluminum had fallen from a high of $2870 in mid-July to $2375 in mid-September (down $495 in just 2 months’ time).
> Currently a double-bottoming is forming, signaling that a possible reversal trend for this metal.
> 
> Evidences to supports the view that reversal trend is occurring:
> ...




Huntleys Newsletters have been talking up Alumina Limited (AWC)
Heres some of there take on aluminium:

The problem for aluminium prices - compared to other base metals - is the Chinese have been able to export the same deflationary forces as they have for other manufactured goods. Global aluminium demand is forecast to double by 2020 driven by China. This requires three times the growth rate of the past 20 years. Chinese aluminium consumption is to grow by over 30% just in 2007. China is on an established development path with per capita aluminium demand up from around 1kg in 1994 to almost 8.5kg presently, still well below developed world averages of around 30kg. 
:iagree:
SGB


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## SGB (19 October 2007)

SGB said:


> Huntleys Newsletters have been talking up Alumina Limited (AWC)
> Heres some of there take on aluminium:
> 
> The problem for aluminium prices - compared to other base metals - is the Chinese have been able to export the same deflationary forces as they have for other manufactured goods. Global aluminium demand is forecast to double by 2020 driven by China. This requires three times the growth rate of the past 20 years. Chinese aluminium consumption is to grow by over 30% just in 2007. China is on an established development path with per capita aluminium demand up from around 1kg in 1994 to almost 8.5kg presently, still well below developed world averages of around 30kg.
> ...




Event Analysis

But Chinese self sufficiency for aluminium has accelerated. Aluminium is not a rare element. Production is largely a manufacturing process limited by sufficient quantities of cheap raw materials and power. Contrast copper where smelting capacity has also grown sharply but has succeeded only in driving smelter charges lower due to competition for concentrates. Building smelters doesn't increase copper mine supply. Copper prices have outperformed aluminium by a country mile.

So why recommend AWC with this backdrop? For a number of reasons! Four and a half tonnes of bauxite becomes two tonnes of alumina becomes one tonne of aluminium. China has extensive bauxite reserves and huge reserves of coal. But Chinese ore requires high temperatures and pressures and up to four times the energy of Australian refineries. The alternative is to import bauxite, and import they do. Chinese constraints of energy and bauxite supply are now stretched globally. Growth in Chinese alumina production has come at a cost. Chinese aluminium output is predominantly highest quartile cost and has driven the industry cash cost curve up abetted by energy and caustic prices. Approximately one tonne of caustic soda is used for every 13 tonnes alumina. It is inevitable that higher average production costs will ultimately require the support of higher alumina and aluminium prices.

Further, China's inflation is on the rise and there is evidence that prices for exports are starting to follow. Minimum wages are beginning to increase and with higher raw materials prices, rising production costs may no longer be able to be absorbed. High economic growth almost inevitably leads to inflation. The fundamentals allowing high cost Chinese production to survive and proliferate in a relatively subdued price environment are unlikely to persist. One of the world's largest and most conservative miners, RIO, has flagged this with its takeover bid for Alcan. The market reaction has been lukewarm but history may show RIO's move to be yet another in a long list of clever deals. Keys are long life, quality bauxite and long term low cost energy supporting a sustainable low cash cost position. Higher raw material costs, increasing energy prices, currency appreciation, construction cost escalation and supply chain constraints which are negative for AWC in the nearer term, should support higher long term prices. AWC has long life, quality bauxite and favourable mid second quartile cash costs significantly lower than those of RIO's Alcan. Its refineries provide a solid platform for lower risk, brownfield expansion at a considerable cost advantage to greenfield sites.


SGB


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## CanOz (19 October 2007)

Food for thought...

I know for a fact that the Chinese are working on a mega project to process Bauxite in the middle east using the poorer quality crude oil that is readily available. They will ship the ore from various places to the plant and then ship the alumina back to China for further processing.

Project is still in the planning stages as far as i know.

Not sure how this would impact the supply/demand equation, just thought i would mention it to see if anyone had any thoughts on it.

Cheers,


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## BREND (20 October 2007)

CanOz said:


> Food for thought...
> 
> I know for a fact that the Chinese are working on a mega project to process Bauxite in the middle east using the poorer quality crude oil that is readily available. They will ship the ore from various places to the plant and then ship the alumina back to China for further processing.
> 
> ...




Aluminum's balance supply/ demand equation can only last for another 5 years, after that aluminum is expected to fall into deficit stage.


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## BREND (1 November 2007)

Aluminum has risen to $2836 today. 

Cancelled warrants has been rising lately, indicating rise in demand for this metal. Double bottom is fully formed, I'll not be surprised to see aluminum price rising much higher in the next few days. :


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## BREND (1 November 2007)

Aluminum inventory is down 1,675 tons today, price rises another $13.
Currently trading at $2562.


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## CanOz (1 November 2007)

Brend, check your posts 6 & 7, what price did you mean?


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## BREND (2 November 2007)

CanOz said:


> Brend, check your posts 6 & 7, what price did you mean?




ops, price at post 6 is wrong.


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## BREND (2 November 2007)

Today its up another $25, last done price is $2570.


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