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Research agency urges investors caution on aluminum sector
Edited by : AL CIRCLE
1 min read
Investors should take a cautious approach to the aluminum sector at a time of weak prices and persistent oversupply, BMO Research says, describing recently-announced output cuts at major producer Chalco as “not enough” to balance the China market.
“Overproduction and high inventory levels continue to pressure prices and profits, despite generally robust demand,” the house says.
In China, where BMO is forecasting a 556,000 metric ton surplus in 2013, “the question is how long Chalco suspends production at its smelters, and whether other Chinese smelters will follow.” Ex-China, BMO is forecasting a 109,000 ton deficit this year. Chalco will temporarily shut down about 9% of its output due to market conditions, according to a regulatory filing Wednesday. Three-month aluminum is down 0.9% at $1,954/ton.
“Overproduction and high inventory levels continue to pressure prices and profits, despite generally robust demand,” the house says.
In China, where BMO is forecasting a 556,000 metric ton surplus in 2013, “the question is how long Chalco suspends production at its smelters, and whether other Chinese smelters will follow.” Ex-China, BMO is forecasting a 109,000 ton deficit this year. Chalco will temporarily shut down about 9% of its output due to market conditions, according to a regulatory filing Wednesday. Three-month aluminum is down 0.9% at $1,954/ton.
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