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Physical Demand Keeps Aluminum Prices Supported – HARBOR
Edited by : AL CIRCLE
2 min read
Physical demand is keeping aluminum prices supported, even as prices have retreated along with other commodities, said a metals consulting firm on Thursday.
Prices have fallen with other commodity markets, but Jorge Vazquez, vice president of HARBOR Intelligence Aluminum, noted that prices for aluminum have not fallen to the same degree as other metals during the across-the-board market break in September. He attributes some speculative selling and a stronger U.S. dollar for the price weakness.
Aluminum is trading around $2,200 a metric ton.
He also noted that demand for aluminum continues to be strong in Asia.
The demand for aluminum is likely to continue to rise, even with the problems facing Europe and its sovereign-debt crisis. He said demand from Asia, the U.S. and Brazil is still growing, even as production shows no sizable increases.
Vazquez noted that at $2,200, prices are in line with the current average cost of production. If prices continue to fall, producers will be faced with the question of how long to operate at a loss. Part of that decision on whether to continue to operate depends on how much hedging the producer has done and “book orders.”
He said HARBOR expects prices at $2,800 at the end of the year, citing physical buying and strong demand for aluminum. “I know we are sometimes indentified as being always bullish, but one reason behind it is that the industry is facing inflation costs of 7% a year since 2004,” he said.
Prices have fallen with other commodity markets, but Jorge Vazquez, vice president of HARBOR Intelligence Aluminum, noted that prices for aluminum have not fallen to the same degree as other metals during the across-the-board market break in September. He attributes some speculative selling and a stronger U.S. dollar for the price weakness.
Aluminum is trading around $2,200 a metric ton.
He also noted that demand for aluminum continues to be strong in Asia.
The demand for aluminum is likely to continue to rise, even with the problems facing Europe and its sovereign-debt crisis. He said demand from Asia, the U.S. and Brazil is still growing, even as production shows no sizable increases.
Vazquez noted that at $2,200, prices are in line with the current average cost of production. If prices continue to fall, producers will be faced with the question of how long to operate at a loss. Part of that decision on whether to continue to operate depends on how much hedging the producer has done and “book orders.”
He said HARBOR expects prices at $2,800 at the end of the year, citing physical buying and strong demand for aluminum. “I know we are sometimes indentified as being always bullish, but one reason behind it is that the industry is facing inflation costs of 7% a year since 2004,” he said.
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