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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Here's An Unexpected Jump in Base Metals Prices

There's been increasing uncertainty in base metals markets lately.

Zinc may be headed for under-supply as key mines globally shut down. Copper demand in China has been somewhat erratic of late.

And data last week suggest that yet another metal may also be seeing some big changes.


Black China Blog reports that aluminum premiums in Japan have been surging of late. With buyers here being asked to pay premiums of up to $410 per tonne for the third quarter of the year.

That's a significant rise from the previous quarter. Representing a 9% increase.

The surprising jump is being partially attributed to rising Japanese aluminum demand. With economic stimulus in the country creating increased orders for vehicles and consumer goods.

But the more interesting side of this equation is supply. Which Black China's analysts believe is tighter than many observers realize.

The group notes that available aluminium metal in many parts of the world is currently running at less than demand. With this shortage now seeping through into Japanese markets--and beginning to drive up prices.

That may explain some of the trading lately in the aluminum price. Which looks like it's been trying to stage a breakout.

In early April, aluminum took a run to near $0.85 per pound, up from a low around $0.75. The rally fizzled however, and rates dropped back to near $0.78.

But the price has once again been showing strength over the past week. Jumping to a current $0.815, from $0.78--a gain of 4.5% in a matter of days.

These are the first real signs of strength in the aluminum price since 2012. Combined with the whisperings about tight supply--and rising demand in key centers like Japan--this could make the little-discussed metal once to watch over the coming weeks.

Here's to paying a premium,

By Dave Forest

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