LME three-month aluminium prices have risen strongly since mid-September, building from a low of 1,777 dollars/tonne (80.6 cents/lb) to hit 2,058 dollars/tonne (93.3 cents/lb) on November 11 - a new 10 1/2 year high. In contrast to last year, when aluminium prices fell by almost 200 dollars/tonne during LME Week, this year's version of events (during the week beginning Monday, October 31) saw all base metals, with the exception of nickel, register strong gains. Reflecting their perceived stronger fundamentals for next year, aluminium and zinc were at the forefront of driving the LME complex higher. Bulls have been the dominant animal over the past month, with buying from all types of investors (macro funds, CTAs, etc) firmly in evidence, while market shorts desperately covering positions have added impetus to the rally. At the time of writing, the three-month contract was trading in the 2,000-2,050 dollars/tonne range (90.7-93.0 cents/lb). In order to predict the next definitive move in aluminium prices (either to 2,150 dollars/tonne (97.5 cents/lb) or back to 1,850 dollars/tonne (83.9 cents/lb), for example), it is important to identify the reasons behind the latest rally.
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