# Predicting Aluminum price



## BREND (9 January 2007)

Aluminum is my 3rd favourite metal for 2007.

Alumina and power are two main drivers of aluminum price.
When alumina and crude oil price fall, aluminum price also fall.

See the link for illustration:
http://basemetal-trading.blogspot.com/2007/01/predicting-aluminum-price_08.html


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## BREND (12 January 2007)

Hedge funds bought a lot of call options for Aluminum previously, are pushing up Aluminum price recently. 

And seller of those options, which are likely to be the brokers, have to buy up Aluminum futures as well, performing delta hedging, hence pushing Aluminum price much higher.

See attached link for more details:
http://basemetal-trading.blogspot.com/2007/01/hedge-funds-bought-lot-of-call-option.html


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## Uncle Festivus (18 January 2007)

All eyes will be on the aluminium market today. Commodity traders are bracing for volatility as they wait to see how one party that has built a massive position in the market will act.

Full article here


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## BREND (19 January 2007)

Uncle Festivus said:
			
		

> All eyes will be on the aluminium market today. Commodity traders are bracing for volatility as they wait to see how one party that has built a massive position in the market will act.
> 
> Full article here




Heard that this game is not over yet. There is huge rise of aluminum inventory lately, likely to be delivered from the shorts. We may more inflow in the next few days. At the same time, funds bought a lot of Al Feb call options, likely that they will push the price higher before expiration next month.


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## Smurf1976 (19 January 2007)

Regarding the relationship between aluminium and the oil price, I don't think that's due to the factors you are assuming it is.

Some alumina refineries do use oil as the heat source although gas is preferred due to cost savings. Some also use coal. 

But for actual aluminium smelters, oil is prohibitively uneconomic as a power source and this has been the case for quite some time. Hence the many smelters built near sources of hydro-electricity (including Tasmania, New Zealand, Canada, South America) or near cheap coal-fired power (Victoria, NSW, Queensland, South Africa).

Gas is economic only if it's supplied at an incredibly cheap rate. Build the smelter in Iran or Russia and it should be cheap enough but it generally isn't elsewhere.

That said, there is also some fuel oil used to fire the anode baking ovens at aluminium smelters where gas isn't available (places with cheap electricity, especially hydro-electricity, often don't have gas available). Also the anodes themselves are made from petroleum coke (a waste product of oil refining). 

But overall it is electricity that is the major energy input and this generally isn't from oil apart from backup during droughts or coal-fired plant breakdowns. 

So I'm a bit puzzled about a link between oil and aluminium prices. I think it has more to do with both of them being commodities than one being used to produce the other.


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## BREND (21 January 2007)

Smurf1976 said:
			
		

> Regarding the relationship between aluminium and the oil price, I don't think that's due to the factors you are assuming it is.
> 
> Some alumina refineries do use oil as the heat source although gas is preferred due to cost savings. Some also use coal.
> 
> ...




Maybe you are right, thanks!


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## tech/a (21 January 2007)

BREND

I know your fundamental---But

As for price predictions/indications of all metals have you thought of Elliot Wave analysis. Its used by many although few are experts (Im no expert in this area ). 
What I have seen and do know from study is that it has a habit of being errily accurate.

Aluminium is in a corrective phase with no clear indication at this time as to where it will go--bull or bear. It has completed its near term trend at its last high.


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## BREND (21 January 2007)

tech/a said:
			
		

> BREND
> 
> I know your fundamental---But
> 
> ...




We believe that aluminum price will still go up in short term, because hedge funds bought huge amount of Feb 07 call option, so likely funds will push up aluminum price before Feb. And 1 fund is currently cornering the aluminum market, this is why the backwardation is so high now.

Yes, we look at technical too, ie Elliot wave, Greed & fear analysis, TD Reversal signals, and basics: trendline, RSI, MA. 

Few days ago tin has a buy signal, currently nickel is toppish from technical point of view, and copper is rather mixed.

Conclusion: We look at fundamental, technical and funds' intention before making any recommendations to my clients. 

Details are inside my blogs:
http://basemetal-trading.blogspot.com/2006/12/suggested-strategy-for-metal-trading.html


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## tech/a (21 January 2007)

Brend.

Im interested in your Elliot analysis could you either point me to charts or post them up please.

Thanks.


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## BREND (22 January 2007)

Smurf1976 said:
			
		

> Regarding the relationship between aluminium and the oil price, I don't think that's due to the factors you are assuming it is.
> 
> Some alumina refineries do use oil as the heat source although gas is preferred due to cost savings. Some also use coal.
> 
> ...




Chinese domestic alumina prices have risen 300 yuan or 12 percent to 2,650-2,800 yuan ($341-360) per tonne over the last week as domestic refineries raise prices and demand remains strong.

Hence this should provide support for aluminum price.


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## tech/a (22 January 2007)

tech/a said:
			
		

> Brend.
> 
> Im interested in your Elliot analysis could you either point me to charts or post them up please.
> 
> Thanks.





*HELLO!!*


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## BREND (22 January 2007)

tech/a said:
			
		

> *HELLO!!*




I have difficulties in transferring charts from bloomberg to my email lately. Once I can transfer successfully, I'll post it into my blog.


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## BREND (22 January 2007)

tech/a said:
			
		

> *HELLO!!*




Done! Its in my blog now: http://basemetal-trading.blogspot.com/


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## tech/a (23 January 2007)

Brend

Love your blog.
Massive amounts of work.
Anyone who puts that amount into his passion should be congratulated.

Anyway of blowing up your charts as they are to small to read.

Thanks.
OH

Do you have a list of codes?
I think I have them in chart form from my international downloads but are un familiar with the codes to find.


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## BREND (23 January 2007)

tech/a said:
			
		

> Brend
> 
> Love your blog.
> Massive amounts of work.
> ...




Thanks, yes, its about passion!
I tried to blow the chart, it will look blur.
I dont have the codes.


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## michael_selway (23 January 2007)

BREND said:
			
		

> Aluminum is my 3rd favourite metal for 2007.
> 
> Alumina and power are two main drivers of aluminum price.
> When alumina and crude oil price fall, aluminum price also fall.
> ...




whats your first & second?

thx

MS


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## BREND (23 January 2007)

michael_selway said:
			
		

> whats your first & second?
> 
> thx
> 
> MS




My first is tin, today tin price is already $12000, almost time to take profit.
Second is lead, good to buy today.


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## ducati916 (13 April 2007)

For those that trade/follow aluminium, what's your best analysis?
Higher prices, or lower?

Any relevant fundamental drivers?

jog on
d998


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