Aluminium prices to recover during 2009 -StanChart
Times：2009-03-04 06:20:56 Author：
LONDON, Feb 16 (Reuters) - A sharp acceleration in output cutbacks at aluminium producers in recent weeks suggests prices could be close to a bottom and may recover over the course of this year, Standard Chartered said in a note.
Three-month aluminium
Prices of the metal used in transport, packaging and construction have tumbled by about 60 percent since a record high of $3,380 a tonne in July last year.
Standard Chartered expects prices to average $1,420 a tonne in the first quarter of this year, $1,500 in the second quarter, $1,550 in the third quarter and $1,600 in the fourth quarter.
"Further ahead we are predicting a more significant rally to become established on the back of a weakening dollar, rising oil prices and some pick-up in demand," it said on Friday.
"We are looking for the price to steadily rise to average $1,750 a tonne in 2010."A weaker U.S. currency makes metals priced in dollars cheaper for holders of other currencies, while energy is estimated to account for up to 40 percent of aluminium smelting costs.
Standard Chartered said recent figures from metal consultants CRU Group show 5.8 million tonnes of aluminium capacity closures have been announced during the recent downturn. "This accounts for 15 percent of global supply. Furthermore, around 700 thousand tonnes of these cuts were announced in the last 2 weeks alone."The demand backdrop for aluminium is weak, but there is a bright spot -- the packaging sector, which is proving to be relatively immune to the economic downturn, the bank said.
"However, its impact is limited because packaging is half the size of the construction and transport sectors, which account for 50 percent of demand," Standard Chartered said.
It expects aluminium demand to fall by 2 percent this year to 38.166 million tonnes compared with supplies of 38.842 million tonnes, with modest growth in China offsetting weakness elsewhere.
"In particular, China's stimulus package will provide a significant boost to demand due to extra investment in the electricity grid."The bank said record aluminium stocks -- at above 2.9 million tonnes in London Metal Exchange warehouses -- are a problem for the market. The previous record was 2.66 million tonnes in June 1994.
"But ... The industry has doubled in size over the last 14 years and today's stock represents 7 percent of global annual demand compared to 13 percent in 1994," it said.
Three-month aluminium
Prices of the metal used in transport, packaging and construction have tumbled by about 60 percent since a record high of $3,380 a tonne in July last year.
Standard Chartered expects prices to average $1,420 a tonne in the first quarter of this year, $1,500 in the second quarter, $1,550 in the third quarter and $1,600 in the fourth quarter.
"Further ahead we are predicting a more significant rally to become established on the back of a weakening dollar, rising oil prices and some pick-up in demand," it said on Friday.
"We are looking for the price to steadily rise to average $1,750 a tonne in 2010."A weaker U.S. currency makes metals priced in dollars cheaper for holders of other currencies, while energy is estimated to account for up to 40 percent of aluminium smelting costs.
Standard Chartered said recent figures from metal consultants CRU Group show 5.8 million tonnes of aluminium capacity closures have been announced during the recent downturn. "This accounts for 15 percent of global supply. Furthermore, around 700 thousand tonnes of these cuts were announced in the last 2 weeks alone."The demand backdrop for aluminium is weak, but there is a bright spot -- the packaging sector, which is proving to be relatively immune to the economic downturn, the bank said.
"However, its impact is limited because packaging is half the size of the construction and transport sectors, which account for 50 percent of demand," Standard Chartered said.
It expects aluminium demand to fall by 2 percent this year to 38.166 million tonnes compared with supplies of 38.842 million tonnes, with modest growth in China offsetting weakness elsewhere.
"In particular, China's stimulus package will provide a significant boost to demand due to extra investment in the electricity grid."The bank said record aluminium stocks -- at above 2.9 million tonnes in London Metal Exchange warehouses -- are a problem for the market. The previous record was 2.66 million tonnes in June 1994.
"But ... The industry has doubled in size over the last 14 years and today's stock represents 7 percent of global annual demand compared to 13 percent in 1994," it said.
