LME main commodity international prices (2024. 11. 04.~11.08.)

Analysis of LME Aluminum Price Fluctuations

From November 4 to 8, 2024, the LME (London Metal Exchange) aluminum prices showed an upward trend. On November 7, the three-month futures price for aluminum rose to $2,682 per ton, an increase compared to the previous trading day. Similarly, the spot price also rose from $2,549.50 to $2,652.50.

1. Recovery of Chinese Demand

The expectation of an economic recovery in China has lifted the prices of aluminum and other base metals. China's government stimulus measures and the resumption of infrastructure projects have led to increased demand for aluminum, which in turn has supported the price rise.

2. Weakening US Dollar

Although the recently released US Consumer Price Index (CPI) showed a higher-than-expected inflation rate, markets interpreted this as a signal for the Federal Reserve to pause interest rate hikes, resulting in a weaker US dollar. A weaker dollar typically leads to higher prices for commodities traded in dollars, such as aluminum.

3. Declining Inventories

Aluminum inventories in LME warehouses saw a slight decrease in early November. From November 6, stock levels dropped from 736,900 tons to 734,400 tons on November 7, contributing to concerns over supply shortages and further boosting prices.

4. Declining Energy Costs

Aluminum production is an energy-intensive process. Recently, energy prices in Europe and some parts of Asia have stabilized, reducing the cost of aluminum smelting. Specifically, the easing of natural gas prices has lowered aluminum production costs, which in turn has affected supply dynamics and contributed to price movements in the market.

5. Increase in Exports from Europe and Asia

Exports of aluminum from Europe and Asia have been rising, helping to revive global supply chains. Southeast Asian countries, including Indonesia, have increased their aluminum production, which has somewhat offset price pressures in the international market. Indonesia’s growing aluminum output, in particular, has strengthened supply across Asia, leading to greater price volatility on the LME.

6. Impact of US Interest Rate Policy

Despite the Federal Reserve's decision to keep interest rates unchanged, markets have been pricing in the possibility of future rate cuts. This expectation has further weakened the US dollar, which has had a positive impact on the prices of commodities traded in non-dollar currencies, including aluminum. A weaker dollar increases the purchasing power of countries using other currencies, thereby stimulating demand.

7. Climate Change and Green Energy Policies

In the long term, the global shift toward sustainable energy is accelerating demand for aluminum. The use of aluminum in electric vehicles (EVs) and renewable energy infrastructure is essential, and this ongoing demand for aluminum has had a positive effect on short-term price movements.

The increase in LME aluminum prices between November 4 and 8, 2024, was driven by a combination of factors. The recovery in Chinese demand, stable energy costs, a recovering global supply chain, and changes in US monetary policy were key drivers behind the price surge.