SS: LME aluminum price to average USD 2,400 per tonne – Analysts
Analysts at JP Morgan expressed that the LME Aluminum average price will be USD 2,400 per tonne in the year 2009.
JP Morgan is a leading financial services firm with global scale and reach. The quantity of aluminum in stock have reached to 1.15 million tonnes, the LME price will decrease by 12% down to USD 2,715 per tonne. That is more than they estimated before.
It is estimated that in the year 2009 year aluminum supply will increase by 8%, which is higher than 6% in the year 2008. Aluminum consumption will increase by 6% in the year 2009 that is the same increasing rate than in the year 2008.
The situation that the demand exceeds supply will be alleviated if the aluminum price declining forced to reduce smelter production especially in China.
(Sourced from YIEH.com)
93% of world aluminum smelters are losing money – Report
Reuters reported that almost all the world's aluminum smelters are losing money because the metal's price has sunk to USD 2,200 per tonne.
Mr Jim Southwood president at industry consultants CRU Price Risk Management said that "93% of all the smelter capacity in the world is losing money with prices at around USD 2,200 per tonne. We have just reached to that level where there is significant pain for producers."
Weakening demand and a global sell off in commodity markets have pushed aluminum prices to around USD 2,200 per tonne from around USD 2,500 per tonne in September.
Mr Southwood said that the top 20% of the total aluminum smelting capacity was geographically disbursed between North America, China and Europe. Currencies would determine which region would start experiencing shutdowns. He added that "If the US dollar starts to strengthen, we can see first shut downs coming from the North America."
Mr Southwood said fundamentals usually are the main driver of the aluminum price, with an oversupply of material at a time when demand sagged, but those elements also have changed. He added that "Fundamentals now include the dollar and energy prices. Around USD 200 of that was due to liquidation of the market and the rest was due to the rise in the US dollar."
Meanwhile, Mr Michael Jansen executive director of commodities at JP Morgan said that "Aluminum demand is highly leveraged to China consumption. China's GDP and industrial production are slowing. The global industrial machine will remain subdued for six months at least."
