LONDON (Commodity Online): With the LME metals reported in US dollars, it is the dollar price that the market ultimately focuses on. However, looking at the metals prices in other currencies can offer far more insight into
the market, and can also potentially offer better value. This is particularly true for aluminium at the moment.
Aluminium, priced in dollar terms doesn’t look that appetising at the moment. The metal is in the doldrums, being nearly $300 off its recent highs, but still over $200 above the levels its was trading at during the summer.
Looking at aluminium in Euros however, the metal looks far more appealing. Currently 3-month aluminium, priced in euros, is only around 3% higher then its July average. This compares with aluminium priced in dollars which is nearly 8% higher than its July average.
The difference between the cycle lows is also equally dramatic, with the 3-month aluminium priced in dollars up 41% from the February lows, compared with only a 23% increase when viewed in Euro terms. While the near-term outlook for the base metals remains volatile, the downside for aluminium prices in euros looks relatively limited.
On that basis, aluminium looks a far better prospect priced in Euros, particularly for consumers looking to rebuild
inventories.
Courtesy: Commodities Research, Starndard Bank
