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LME aluminum price expected to rise in 2013
Edited by : AL CIRCLE
2 min read
The London Metal Exchange aluminum cash price to average $1.08 per pound in 2013 and continues increasing, while warehouse stock financing will maintain profitable through 2014, according to Davenport & Co.
Davenport analyst Tim Hayes said Wednesday at the ISRI Commodities Roundtable Forum in Chicago that the company expects the LME aluminum cash price average to finish at 93 cents per pound for 2012 before climbing next year.
Hayes described the Richmond, Va.-based company’s outlook on aluminum prices as "bullish," forecasting an average cash price of $1.20 in 2014 and $1.27 in 2015.
The LME aluminum cash price closed the official session at $2,082 per tonne (94.4 cents per pound) Thursday.
The likelihood of low interest rates through 2014 will continue to make LME warehouse stock financing profitable for the next two years, Hayes said. "Stock financing is here for a while. It may even increase," he added. "One day it will end, but will end not abruptly, but gradually. We expect the metal will come to the market over a two-year span. It will drip into the market, not flood."
Aluminum stocks in LME-registered warehouses rose to 4,971,325 tonnes (10.9 billion pounds) Wednesday, up 2.4 percent from 4,854,325 tonnes Tuesday.
Meanwhile, Aluminum Association vice president of business information and member services Nick Adams said at the forum that 2012 domestic aluminum consumption is likely to be up 7 percent from 2011 levels, although he cautioned that it might drop off the second half of the year.
There’s always a dip in the fourth quarter and there’s always a recovery in the second and third," he said.
Consumption has yet to return to its pre-downturn peak of 10.5 million tonnes in 2006, with Adams saying that overall growth is slowing despite consumption improving in such key markets as transportation.
Adams reported that auto production has been up 23 percent year on year in the first seven months of 2012, while housing starts were also up 25 percent over the same period.
Construction spending was also up 9.3 percent to $464.4 billion in the first seven months of 2012.
Davenport analyst Tim Hayes said Wednesday at the ISRI Commodities Roundtable Forum in Chicago that the company expects the LME aluminum cash price average to finish at 93 cents per pound for 2012 before climbing next year.
Hayes described the Richmond, Va.-based company’s outlook on aluminum prices as "bullish," forecasting an average cash price of $1.20 in 2014 and $1.27 in 2015.
The LME aluminum cash price closed the official session at $2,082 per tonne (94.4 cents per pound) Thursday.
The likelihood of low interest rates through 2014 will continue to make LME warehouse stock financing profitable for the next two years, Hayes said. "Stock financing is here for a while. It may even increase," he added. "One day it will end, but will end not abruptly, but gradually. We expect the metal will come to the market over a two-year span. It will drip into the market, not flood."
Aluminum stocks in LME-registered warehouses rose to 4,971,325 tonnes (10.9 billion pounds) Wednesday, up 2.4 percent from 4,854,325 tonnes Tuesday.
Meanwhile, Aluminum Association vice president of business information and member services Nick Adams said at the forum that 2012 domestic aluminum consumption is likely to be up 7 percent from 2011 levels, although he cautioned that it might drop off the second half of the year.
There’s always a dip in the fourth quarter and there’s always a recovery in the second and third," he said.
Consumption has yet to return to its pre-downturn peak of 10.5 million tonnes in 2006, with Adams saying that overall growth is slowing despite consumption improving in such key markets as transportation.
Adams reported that auto production has been up 23 percent year on year in the first seven months of 2012, while housing starts were also up 25 percent over the same period.
Construction spending was also up 9.3 percent to $464.4 billion in the first seven months of 2012.
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