Goldman Sachs, BOC International upbeat about 2017 aluminium prices, CRU differs

Global market analysis and investment banking firms seem to be somewhat divided over aluminium price outlook for 2017. While Goldman Sachs in its recent study put average aluminium price at US$2,000 per tonne (for coming six months) and US$2,100 per tonne (for twelve months), CRU stated that it expected the lightmetal to trade lower over the medium term.

Goldman Sachs based his price forecast on China’s current aluminium industry scenario, where the regional governments have become proactive in cracking down illegal smelting capacities. Already 2 million tonnes of aluminium capacity have been ordered to close. More such orders are awaited by the aluminium smelters operating in Shandong and other regions in China. The global investment banking firm believes these smelter closures are going to impact aluminium price scenario in the long run supporting it at moderate highs.

CRU does not seem to hold the same optimistic aluminium price outlook as Goldman Sachs. The commodity analysis firm predicts the base metal price to be at US$1,830 per tonne in 2017. It says, “A series of risks and factors will trigger big swing in aluminium prices.”

Citic Securities expressed same view as CRU. It said despite capacity closure in a few regions in China, commissioning of new capacity and restarting of old capacity in other regions will add to the total supply pressuring aluminium prices in the long run.

The market lacks “new growth points on the demand side as well, Citic Securities added.

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BOC International Holdings Limited also released its price forecast for base metals from the second to the fourth quarter of 2017.

It sees aluminium price to average at US$1,930 per tonne in Q2, US$2,000 per tonne in Q3 and US$2,050 per tonne in Q4 of the current fiscal year.