On August 05, aluminium futures advanced, gaining ground from the recent weakness of the greenback ahead of key labor data. London futures tied to the base metal rose 1.44% to $2,437.50 per metric ton.
Accordingly, a weaker US dollar translates to cheaper costs for commodity buyers using other currencies. At the same time, soaring electricity prices have also given certain support to aluminium prices.
Nevertheless, the overall sentiment remained bearish with concerns over a prolonged interest rate hike by the Federal Reserve. American policymakers reiterated their determination to tame inflation, and hawkish remarks made market sentiment cautious again.
Meanwhile, new energy infrastructures such as wind power and photovoltaics have accelerated this year. In addition, there is an increased investment in the power grid, boosting the demand for cables.
However, the current aluminium market is still oversupplied. As of August 4, the domestic ingot social inventory for the metal posted at 678,000 metric tons. This latest report posted an increase of 7,000 MT when compared with the previous week.
Analysts cited a 50.00 to 75.00 basis points increase from the American central bank that is currently hanging on the table. Thus, participants look to eliminate their risk exposure to the current price volatility.
Moreover, the European energy crisis intensified, which has fueled the expectations for overseas production cuts.
Aluminium and other base metals
Aside from aluminium, other base metals also found support in Friday’s trading session.
For instance, London copper hiked 0.49% to $3.50 per metric ton after recording a three-day loss earlier this week. The red metal also slipped from the flaring US-China tensions following America’s visit to Taiwan.
In line with this, the near-term demand outlook in Beijing, the world’s top metals consumer, edged down.
Like aluminium, nickel contracts accelerated 0.33% to $22,283.50 per metric ton. However, given the bearish macro environment and oversupply, prices could remain under pressure.