Aluminium set for medium term gains?

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Aluminium is a metal worth considering for a medium term buy.Here are the positive reasons for that:

• Global aluminium demand growth is set to grow moved by energy transition related sectors like transportation and renewable energy from China, the US and Europe. Many major economies have a real push now to try and reach ‘net-zero’ carbon emissions and there is a big political drive for renewable energy and electric power.
• China’s primary supply growth is set to plateau. China is under pressure to bring down carbon dioxide emissions from primary aluminium smelting and ING think capacity could be capped under 45 million tonnes. The upshot is that secondary aluminium capacity has to take up the slack.

• Emission concerns in Inner Mongolia and Yunnan due to hydro electric water shortages have meant smelters here have had to dial back production

• Aluminium is, according to Bloomberg, the least vulnerable to China’s state reserve sale

The zone marked on the chart looks a good area to expect buyers as long as the demand/supply imbalance remains.