Aluminum Ready for a Big Bull Run?? Atleast Charts and Global Liquidity Chase is Saying that!

August 6, 2020

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Strategic Alpha

Dear Strategicalpha Tribe Members,

Have been saying from past 1 Year that commodity Bull Run is ahead of us, Usually, Commodity bull runs are started by Gold and Silver, and then it enters into Industrial Base Metals. Aluminum is such a commodity that is gaining popularity over steel. Whoever wants to reduce the weight of the structure will prefer aluminum over steel.
Aluminum is the second most used metal in the world after steel with an
annual consumption of 88 Million Tonnes (including scrap). It is also the
fastest-growing metal which has grown by nearly 20 times in the last sixty
years (compared to 6 to 7 times for other metals). Some of its unique
properties like lightweight, recyclability, conductivity, non- corrosiveness
and durability have helped establish it as a metal of choice for various
applications across various segments of the manufacturing sector.
Aluminum is also called ‘the Metal of Future’ due to the above properties.
Being lighter (3 times lighter than steel), it aids in fuel efficiency making it
an efficient choice for automotive, defense, and aviation. The construction
industry relies on a variety of aluminum alloys in the manufacture of
products ranging from exterior siding to structural components due to its
durability and non-corrosive properties. Its ability to conduct heat and
electricity also makes aluminum a popular choice in the electrical and
electronics industries. Coupled with infinitely recyclable properties,
aluminum is a convenient option for the packaging industry such as beverage
cans and foils.
In nature, aluminum does not exist in a pure state. The production of
primary aluminum metal commences with bauxite ore, which is composed
of hydrated aluminum oxide (40%-60%) mixed with silica and iron oxide.
Roughly 4 to 5 tons of bauxite ore is refined to produce approximately 2
tons of alumina. This 2 tons of alumina is smelted to produce approximately
1 ton of aluminum. Production of aluminum is a very capital and energy-intensive process. Alumina, power, and labor account for 75-80% of total
cost depending on the region where it operates.
Globally, auto & transport account for 23% of aluminum consumption,
followed by construction (22%), packaging (13%), electrical (12%), machinery
and equipment (8.5%), consumer durables (4.5%), and other segments (4%).

Technically Aluminium is being ready for a big up move, It Respected 200DMA and Moving above 50DMA now broken the downward sloping trend line. Aluminum as per the Triangle flag breakout Aluminum is strongly headed for 187 and 210 in Medium Term.
This Move will be fueled by global liquidity and money chasing. Markets are irrational at times, but this will lead to a big run to aluminum prices.
Those Punters who missed the Silver bus will bring in their money in base metals now to create demand.

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The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.

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