BLBG: Aluminum Falls to 7-Year Low as Slumping Car Sales Reduce Usage
Aluminum dropped to a seven-year low on the London Metal Exchange as slumping car sales reduced demand for the metal, swelling inventories.
Honda Motor Co., Japan’s second-largest carmaker, expects sales in Japan to fall as much as 11 percent in the year ending March as the recession damps demand. Aluminum inventories have jumped 36 percent this year as U.S. car sales tumbled 37 percent in January. Transportation is the biggest use for the lightweight metal, according to Citigroup Inc.
“We expect aluminum prices to remain weak as long as the economy hasn’t bottomed and inventories are still very high,” said Eliane Tanner, an analyst at Credit Suisse Group in Zurich. “From this point of view, we’re not too positive on aluminum.”
Aluminum for delivery in three months fell as much as $9, or 0.7 percent, to $1,279 a metric ton, the lowest since Nov. 8, 2001, and was at $1,286 as of 11 a.m. local time.
Prices have followed crude oil lower as cheaper production costs spur speculation that supply of the metal will expand. Crude oil has dropped 14 percent this year and aluminum is down 16 percent.
“Aluminum is very energy intensive to produce,” Tanner said. “When prices of energy go up, then aluminum will be supported.”
Copper Wire
Inventories of aluminum rose to a record 3.2 million tons, with 14 percent of supplies in warehouses in Detroit.
The LME index of six industrial metals rose 0.7 percent yesterday as nickel and copper advanced. Copper dropped $39, or 1.2 percent, to $3,192 a ton today and nickel declined $30, or 0.3 percent, to $9,475 a ton.
Copper wire and cable shipments in Japan, the world’s fourth-largest copper buyer, dropped 21 percent in January from a year earlier, the biggest drop since February 1975, according to the Japanese Electric Wire and Cable Makers’ Association.
Zinc dropped $18, or 1.6 percent, to $1,080 a ton. China, the world’s largest producer of zinc, will discuss buying the metal from domestic smelters tomorrow for the second time this year, three company executives familiar with the plan said. The bureau may seek to buy 100,000 tons, one executive said. Zinc purchases were 59,000 tons last month.
Tin declined $105, or 1 percent, to $10,300 and lead fell $33, or 3.2 percent, to $990 a ton.
