November 11, 2022

All major LME industrial metals are rallying this morning after news that China has reduced quarantine times for inbound travelers and for those who have been in close contact with infected people, according to Bloomberg. They have also ended a “circuit breaker” penalty for airlines, whereby airlines were punished for bringing in too many COVID cases, according to Reuters. Wall Street analysts cheered the news, with Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group proclaiming, “the bulls have been waiting for such a trigger.” Zinc had over 5% gains at one point, while aluminum jumped over 4%. (Sources: Bloomberg, Reuters)

Will aluminum prices rally further if China eases other COVID policies? Even with the recent rally, prices are down nearly 14% in 2022, as the last trade on the 3M Select contract was $2,428/mt (7:00 AM CST). This could still be a good time for aluminum end-users to apply simple hedges involving swaps and call options. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (11/11/2022)

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Price Indications

Today's Charts

AEGIS Insights

11/09/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

11/07/2022: AEGIS Primer on LME Aluminum Price History

10/05/2022: European Aluminum Smelters Might Have Negative Margins Through 2023

8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher?

11/11/2022: China shortens quarantines as it eases some of its COVID rules

11/10/2022: Recession-shy investors can turn to capital cycle

11/9/2022: US ferrous: Northern markets slide in November

11/7/2022: US steel sentiment remains bearish as uncertainty looms over the demand outlook: survey

11/7/2022: China again holds firm on ‘zero covid,’ despite the worsening toll

11/7/2022: Moody's says India a bright spot in global steel demand

11/4/2022: India's April-October finished steel exports drop 55% y/y - data

Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.