Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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February 2020 | Base Metals

Aluminium: Trying to build a base

Given the macro uncertainties and judging by the technical configuration, we envisage another retest of the base of aluminium’s well-established downtrending channel before there is any real scope for a meaningful rebound attempt. As such, we envisage prices ‘muddling through’ for a while, similar to October-November 2019 when they built a base from where they ultimately started to climb toward the upper boundary of the channel.

Speculative short position in aluminium expanded

LME aluminium’s micro-dynamics remain fairly bearish, and sentiment has clearly deteriorated further in light of the coronavirus outbreak in China. Not surprisingly, the net short fund position (NSFP) expanded to 30,753 lots in the week to January 31, reversing the trend from earlier in the month when more upbeat sentiment helped positioning moved towards neutral. Gross shorts returned aggressively at the end of January, adding 17,557 lots, which was reinforced by long liquidation of 4,130 lots in the final week of the month. The adverse impact of the Wuhan coronavirus has certainly influenced negatively LME fund managers’ positioning across the base...


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