Hi Eveyone,
I saw a chart on aluminum price and supply, and it looks like reduced
stockpiles have not yet affected aluminum prices. Does anyone have a
POV on this, and what might be good plays on aluminum, assuming one believes prices are going to go up soon ?
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HN not Aluminum but here’s a link for ya to peruse: http://dailytradealert.com/2015/04/18/history-says-this-precious-metal-is-set-to-outperform-gold-over-the-next-year/ Best2ALL!-Benjamin
I’ve almost never written about aluminum, but demand has certainly been rising — I think they built up quite an oversupply for a while though, like with most commodities, when prices were a bit higher. Value-added for automotive and aerospace seems to be the key to the aluminum sector, so the quick “who benefits” answer is probably Alcoa and Precision Castparts.
Aluminum production is an incredible consumer of energy, which is why they try to hard to put plants near hydro electricity, or near the geothermal vents in Iceland, so you’d think that higher demand and lower energy prices would be good for the sector, but you have to have a pretty good handle on the industrial demand — you can check the chart of Aluminum going back 25 years at this site, I don’t get much sense of what causes the moves from one extreme to the next: http://www.infomine.com/investment/metal-prices/aluminum/all/
Thanks, Travis. Glad you didn’t name another miner for me to get clobbered on.
Well, the crickets and hoot owls are the only noises heard for the last few weeks in physical commodities. This week’s action may signal the bottom and portend a new wave of interest in physical commodities.
It’s interesting to chart investor interest by the number of posts on each subject. Biotech columns get a couple of thousand posts, gold and precious metals get a few people’s blood boiling, uranium gets some attention because it is in the energy sector.
But there is no interest at all in basic materials, which to some degree must reflect our collective interest in the sector. So I am just sort of hanging out here
waiting for someone to join in. Ben and Travis look at everything so they hardly count.
If low investor sentiment and interest is a contrary indicator, then now may the time to get on the early train in commodities. I got the early early early early train, which jumped off the rails after going backwards for a while. But take a look at last weeks charts.
Widespread upticks and strong, sharp upmoves:
SLX…steel ETF popped up.
Copper…$SCCO made a strong upmove as copper prices seem headed for $ 3.00.
Ditto $FCX
Aluminum..$AA moved up
Mining…$TCK, $RIO, $NEM, $BHP $VALE all made very strong upmoves
Uranium…seems in the process of breakout
Natural gas as a sector also seems to be perking up in tandem with the recovery in crude oil prices.
Many of the charts have a very severe and steep upmove late last week. The breadth across different industries and commodities gives some credibility to the notion of a sentiment change.
Looking to start some positions in BHP and add to other commodity plays if there is follow-through on this week’s moves. Coal is still dead and the Agri foodstuff prices have not yet followed suit although the fertilizer and processors seem to be perking up.
$DBA looks like it is putting in a bottom.
Long $CCJ $UEC $TCK $NEM $ATUSF $AA $SCCO $ACI $BTU
$VALE forgot about them, I’m and they moved up last week also.
Just tended to forget since I entered at $ 10 and the stock cratered before getting back to
$ 8 this week.
I know v little on this subject (or any, other than blocked toilets, where the bottom is always in ! ). I followed Myron avidly and expensively, 2yrs ago. I thought/think he was brilliant, but he got hung out to dry by the sectors direction, which was way past his control. Id guess that if you compared his picks to the sector in general, his picks have done least badly….. Kudos for that Mr Martin. But it really feels like the whole section is at a plateau and I wonder where all those $ will go if/when people lose more faith in a rapidly devaluing fiat currency. This especially for all those counries that have $ stockpiles and not enough gold in fort knox to meet the bill. Well if you cant get your gold, you may as well have aluminum or iron or timber or almost anything tangible and re-saleable. If you believe that the Petroyuan will come to pass, I think this is an area where you will find some insurance.
Yes, hard assets. Eventually the dollar devalues. Eventually you want hard assets.
Eventually you want tangible stuff.
Aluminum – The following is copied from smallcapnetwork.com newsletter today:
I don’t know how closely you’ve been following the aluminum market of late, but for these stocks and their corresponding companies things have been nothing less than brutal for the past year or so. Between the strong dollar driving prices down and strong competition from China making it near impossible to conduct any reasonable business, names like Alcoa (AA) and Century Aluminum (CENX) have just been mugged.
I bring the matter up today because I’m beginning to wonder to what extent the implosion of aluminum was driven by the dollar and to what extent it was driven lower just by waning demand. I’m beginning to think it was mostly a dollar-related matter. If so, I’m wondering if what the U.S. dollar index is doing now is the beginning of a new trend, and if aluminum may be one of the best and most overlooked ways to play that trend.
The chart of aluminum spot prices below (from Kitco Metals) is a curious one. With just a quick glance you could say the ongoing downtrend is still intact. The longer I look at this chart, however, the more difficult it is to not notice that since November of last year we’ve seen a string of slightly higher lows and at least one higher high. It looks like aluminum is trying to rebound. The $0.70 mark is the line in the sand.
And bear in mind, this rebound effort started to take shape even before the dollar started to show some cracks.
Then I look at the aluminum stock levels using this chart below from InfoMine. While I’m certain that a great deal of the reason warehouse-stored levels of aluminum are falling is because production has been crimped, I can also say with a fair amount of confidence that at least some of this reduction is being driven by plain-old consumption. Perhaps demand for aluminum never really withered as much as feared. If that’s the case and if the U.S. dollar index truly is pointed downward for a while, I just have this funny feeling it could be bigger for the aluminum industry than anybody suspects right now.
Do what you want to with the notion, but you may not want to tarry.
Just so you know, charts of a couple of the key stocks in this group like the aforementioned Century Aluminum and Alcoa are starting to look much healthier than they have in a long while. For instance, CENX shares are back above their 100-day moving average line for the first time in months, and the volume behind this recent bullish effort has been plenty palpable.
http://www.smallcapnetwork.com/Century-Aluminum-Glimmers-With-Hope/s/via/1789/article/view/p/mid/1/id/653/
Yes, it really all still depends on where the dollar decides to go next. Consider this your red flag. Best2ALL-Ben
$CSTM np – Constellium NV (CSTM): This Metric Is Giving A Huge Buy Signal http://www.insidermonkey.com/blog/constellium-nv-cstm-this-metric-is-giving-a-huge-buy-signal-491913/
Website: http://www.constellium.com/