According to Senior Commodity Strategist Daniel Ghali, aluminum prices are facing challenges in rallying further due to signs of CTA buying exhaustion. Ghali notes that demand sentiment has started to decline again, following a brief recovery from the lows seen during the turmoil in August.
One of the key factors supporting aluminum prices has been supply risk premia, particularly related to risks in European smelter output due to higher energy prices. However, there are now indications of notable pressure on supply risk premia since Ukraine’s incursion in Russia.
Looking ahead, Ghali suggests that while CTA flows are expected to remain subdued in the coming week, any continued pressure from demand sentiment or easing of supply risk premia could lead to renewed selling activity. Without a significant catalyst, Ghali believes that LME3m prices may remain around $2500/t in the near-term.
Expert Analysis and Market Insights
As an investment manager and financial market journalist, I have analyzed Ghali’s insights and the current market trends to provide you with a comprehensive understanding of the situation. The decline in demand sentiment and the potential impact on aluminum prices highlight the need for investors to monitor these key factors closely.
For individuals looking to navigate the complex world of commodities trading, understanding the interplay between supply risk premia, demand sentiment, and external geopolitical events is crucial. By staying informed and staying ahead of market trends, investors can make more informed decisions to protect and grow their wealth.
In conclusion, while aluminum prices may face challenges in the near-term, savvy investors can leverage expert analysis and market insights to navigate the shifting landscape and capitalize on opportunities in the commodities market.