What US election years meant for Aluminium Midwest Premium?

Welcome back to the next installment of Chart That Make You Go Hmm...

Below is the Fastmarkets US aluminium Midwest Premium chart which has some visually striking features. Our aim here is to breakdown the chart, with added analysis and the risks and opportunities beyond the US election results.

While every attempt is made to make sure that the information we share is relevant, market changing dynamics can negate our views or theories that we share here. As such, nothing here is set in stone or should be construed as investment advice.

Biden Re-elected

• Biden presided during the Covid era which saw the US aluminium Midwest premium dipped towards the long-term uptrend channel line (see blue line).
• The severe dip in premium was the result of loss in demand as widespread lockdowns was the norm.
• The recovery in premium was a sharp vertical run and the peak in 2022 was mainly due to Russia-Ukraine geopolitical situation.
• A quick historical observations points to Obama 2008 election where he presided over another Black Swan Event - namely the Global Financial Crisis (GFC). During the GFC, the premium traded and rebounded off the long-term uptrend line (similar with Biden Covid).
• Obama was re-elected in 2012 and the Midwest premium did dip for a while but continue to work its way higher again after it was known that Obama was re-elected.
• Can Biden pull off a similar move?

Trump 2.0

• When Donald Trump was elected in 2016, US aluminium Midwest premium bottomed out and held on to the long-term uptrend support line.
• The Trump administration - with the slogan Make America Great Again also spurred investments and spending, supporting domestic premium.
• Will we see similar spending spree if Trump wins office again in 2024?
• One could well make the assumptions that if he is elected again as US President, the bias for US Midwest premium is skewed to the upside.

Common Pattern

• A quick observation to takeaway here is that the US aluminium Midwest premium may have bottomed out and it would appear that who ever is the president, more upside can emerge over the next 12 to 24 months.
• Also, we suspect that pre US election jitters will keep the premium near the current low level but a post US election (after November 2024), we suspect that the premium will work its way higher again.
• Should Biden gets re-elected, there is a high probability that the Midwest premium edge higher the following year (see Obama second term).

Our aluminium Short-Term-Forecasts (STFs) for April is out now and only available on Dashboard. Afzaal Mir and team are the best people to approach if you are interested to read more.

Afzaal Mir Monet Mitchell Imogen Dudman Laura Roberts Yolande Peters Yasemin Sim Esmen Christopher Arndt Charlotte Price Fastmarkets Metals and Mining

Usual disclaimer: nothing here is set in stone and Mr. Market is king and price sets the next narrative. Our view could change if the input and data starts to diverge. Anyone who says they are able to forecast this accurately is likely selling you BS.