Our Advisor’s Thoughts On: Trader Tools Revisited

Peter Neumann revisits the piece he wrote back in January and looks at what has changed in the sphere of commodities

by Peter Neumann, Senior Advisor Commodities at RS Metrics

As we head into the last month of H1 2021, MetalSignals™ continues to point to steady and strong copper and aluminum prices. The latest IMF forecast revision out in April projects global GDP growth in 2021 at 6%, the highest since the 1970’s. This is due to a number of factors that are well developed — primarily, global fiscal support and increasing shift towards higher levels of vaccinations.Since May 2019, MetalSignals™ has been “green” (positive) on 3 month LME copper for 17 months out of 24. On the one month indication, that reading was positive for 18 out of the 24 month period. We await the June analysis, but the current data indicates positive prices in both the 1m and 3m tenor.Near term we are looking at support around $8,800/ mt ( $4.00/lb) on consolidative pullbacks with new highs possible. The recent highs were just above $10,000/ mt.

Copper — 1 — Month Ahead Signal Analysis, Source: RS Metrics MetalSignals™
Copper — 3 — Month Ahead Signal Analysis, Source: RS Metrics MetalSignals™

On aluminum, the directional signals were accurately more mixed. But firmly more positive in the past 12 months, since the Fall of 2020. With the current 3 month LME price at $2,360/mt, we see near term support at $2,240 (dn 5%) and resistance in the $2,610–$2,690 area. The near term signals here are a bit more mixed than copper, with the 1 month indicating potential for consolidation, but the 3 month still solidly green.

Aluminum — 1 — Month Ahead Signal Analysis, Source: RS Metrics MetalSignals™
Aluminum — 3 — Month Ahead Signal Analysis, Source: RS Metrics MetalSignals™

All in all, we are still leaning towards growing commodity demand across the board with tight supply conditions prevailing for the near term.

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