Aluminum Prices Expected to Drop 6% Amid Surplus and Weak Demand – Trafigura Analyst
Aluminum prices are projected to decline by at least 6% over the next six months as supply levels increase and high interest rates suppress manufacturing demand, according to an analyst from Trafigura Group, one of the largest traders of the metal.
“We’re looking at a very grim demand picture right now,” stated metals analyst Henry Van at the CRU World Aluminum Conference in London on Wednesday. “It’s a fundamentally overdone rally.”
Three-month aluminum futures on the London Metal Exchange have risen 8% this year, driven by broad gains across the commodities market. Aluminum is used in a wide range of products, from solar panels and housing to cars and beverage cans.
Van predicts that prices should return to a previous trading range of $2,100 to $2,400 per ton for commodity-grade aluminum over the next six months, citing declining consumption, especially outside of China.
Additionally, higher aluminum prices are prompting smelters to resume previously curtailed production, which is increasing supply. “We have some of the highest restarts on record at the moment,” Van noted.
Bloomberg News reported last Friday, citing sources familiar with the matter, that Trafigura was responsible for a record delivery of aluminum onto the LME, causing total stocks to double in a matter of days to over one million tons.
