The Wall Street Journal
Aluminum Prices Shielded From Surplus
Edited by : AL CIRCLE
2 min read
Aluminum prices look likely to remain propped up for some time, as the metal's popularity with nonmanufacturers, who hold the aluminum in anticipation of selling it at higher prices later, outweighs the bearish impact of a sizable production surplus.
By all accounts, there is a lot more aluminum around than there is demand from manufacturers of such things as airplanes or cans. The global market has a hefty surplus, with Société Générale GLE.FR +1.10% forecasting production to outpace demand by 1.4 million metric tons this year and 1.1 million tons in 2013. Inventories of aluminum held in London Metal Exchange warehouses hit a record last week of 5.177 million tons.
But instead of making its way to manufacturers, much of this metal is finding its way into the hands of the investment community. The aluminum producers either sell the metal to banks, traders or investors, or they pledge it as collateral for loans.
Aluminum prices look likely to remain propped up for some time, as the metal's popularity with nonmanufacturers, who hold the aluminum in anticipation of selling it at higher prices later, outweighs the bearish impact of a sizable production surplus.
By all accounts, there is a lot more aluminum around than there is demand from manufacturers of such things as airplanes or cans. The global market has a hefty surplus, with Société Générale GLE.FR +1.10% forecasting production to outpace demand by 1.4 million metric tons this year and 1.1 million tons in 2013. Inventories of aluminum held in London Metal Exchange warehouses hit a record last week of 5.177 million tons.
But instead of making its way to manufacturers, much of this metal is finding its way into the hands of the investment community. The aluminum producers either sell the metal to banks, traders or investors, or they pledge it as collateral for loans.
By all accounts, there is a lot more aluminum around than there is demand from manufacturers of such things as airplanes or cans. The global market has a hefty surplus, with Société Générale GLE.FR +1.10% forecasting production to outpace demand by 1.4 million metric tons this year and 1.1 million tons in 2013. Inventories of aluminum held in London Metal Exchange warehouses hit a record last week of 5.177 million tons.
But instead of making its way to manufacturers, much of this metal is finding its way into the hands of the investment community. The aluminum producers either sell the metal to banks, traders or investors, or they pledge it as collateral for loans.
Aluminum prices look likely to remain propped up for some time, as the metal's popularity with nonmanufacturers, who hold the aluminum in anticipation of selling it at higher prices later, outweighs the bearish impact of a sizable production surplus.
By all accounts, there is a lot more aluminum around than there is demand from manufacturers of such things as airplanes or cans. The global market has a hefty surplus, with Société Générale GLE.FR +1.10% forecasting production to outpace demand by 1.4 million metric tons this year and 1.1 million tons in 2013. Inventories of aluminum held in London Metal Exchange warehouses hit a record last week of 5.177 million tons.
But instead of making its way to manufacturers, much of this metal is finding its way into the hands of the investment community. The aluminum producers either sell the metal to banks, traders or investors, or they pledge it as collateral for loans.
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