Thats quite a chart of Alcoa (AA) and the chart of Alcoa tells us how far aluminum has run from it's lows just 7 months ago. Is aluminum's ascension over with? Can its rebound be as great as the one that copper has enjoyed over the past 10 months?

The Royal Bank of Scotland (NYSE:RBS) has released its latest Commodity Companion, covering base and precious metals, iron and the energy complex.  Among the major conclusions are the belief that copper will make new record highs by 2013, but that from current prices aluminium may well have the greatest longer term upside. 

RBS is looking for world GDP to rebound by 3.6% in 2010, but is looking for commodity prices to pause for an overdue breather after their recent strong rallies.  After that the picture brightens considerably.

To put this into perspective and based on the official LME close on October 6,2009,
the major base metals have rallied as follows:           

	Date of low	Recovery
Nickel	24 October 008	191%
Zinc	12 December 2008	176%
Lead	29 December 2008	145%
Copper	24 December 2008	109%
Aluminium	24 February 2009	39%

The study produces sets of ranked forecast price moves over two time frames; one year ahead compared with spot average for September 2009, and then through to the average of the second half of 2013. 

For the shorter term, natural gas is the top-ranked among the commodities covered followed by palladium,and oil. Then, among the industrial metals, aluminium comes top in terms of projected price gains (over both time horizons), with copper in second place on both counts.

This is why I like Alcoa (NYSE:AA) for the short-term, as well as Southern Copper (NYSE:PCU) and Freeport-McMoRan Copper & Gold (NYSE:FCX). Those who subscribe to the aluminum potential might also be considering Aluminum Corp. of China (NYSE:ACH)

The RBS report noted that the base metals have had an excellent 2009 so far. That's why it is important to remember that commodity markets have not yet reached equilibrium, with massive supply surpluses and "huge inventory mountains" to be eroded.  Discretion and being aware of a short-term potential correction needs to be observed at this point.

Disclosure: I currently own shares of AA, PCU, and FCX