ACEMAN

Aluminum's Future: A Mixed Bag

Y'all got that right about this shiny product that takes alumina, bauxite and an immense amount of electricity to forge it. But it just ain't supply and demand that has driven this metal and its produces--from the mining pits to the finished product, it's about the cost of inventory (storage) as well as the yield on inventory and of course the shrewdness of the traders and the supply-chain companies to contract and make deliveries on time. Y'all need to ask yourself why is China storing so much of the shiny ingots these past six months regardless of pricing? The answer is in the many deals with the supply-chain folks and the traders. Moreover, now you got sovreigns bidding against themselves to supply both raw resources as well as finished or near finished product. Example is Brazil and its control of Vale/Rio to add aluminum smelting to its gigantic one way trade with China. But never underestimate Glencore and its proxy CENX as it has reduced its CAPEX and sold off unproductive mines and smelters in the US and continues to grow its state of the art smelters in Iceland at low costs of production due to the low cost of electricity! If you look at trade routes for delivery, CENX and Glencore are in the right place. Now it's time to get over to Le Cafe du Monde for my sugar coated beignet's while I make money in aluminum.