Aluminum will drop in price to $ 1,732 per ton - LME

It is reported that on the London Metal Exchange (LME), the price of aluminum may fall to $ 1,732 per tonne, as indicated by the analysis of the Fibonacci projection and the wave pattern. This third wave of the three waves in the cycle corresponded to a high of $ 1.977 per tonne on May 6. The wave then dipped to $ 1,749 on May 26, down below 138.2 percent.

According to the Fibonacci projection, the price of aluminum will hold for some time at $ 1.758 per ton. In the future, this wave is likely to eventually reach the level of $ 1.732 per tonne, down 161.8 percent, which is marked along the downtrend line since January 14, when the low level of $ 1.757 was recorded. It should be noted that the metal was in a strongly oversold area and a decent rebound may be associated with this. Resistance is expected at $ 1,784, a breakout of which could signal a reversal of the downtrend.

According to analysts' forecast, despite the success of the use of aluminum in the automotive industry, prices for this metal will be under pressure from oversupply and low energy prices. It is unlikely that aluminum producers will go for capacity cuts as they did two years ago.

"It will be almost impossible to cut capacity. The cost of production has fallen and despite the fact that prices are falling, the level of margins remains at the same level," said Robin Bar, an analyst at Societe Generale.

An example is the new surge in aluminum production in China, which is also the largest consumer of this metal. In May 2015, the growth of aluminum production in the PRC in annual comparison amounted to 22 percent and reached a record 2.67 million tons.

Perhaps only Rusal's Russian plants will reduce aluminum production by 200 thousand tons (which is still in question) and the American company Alcoa is considering stopping 500 thousand tons of capacities.