Aluminum to Hit $1200/Metric Ton?

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Global Trade, Non-ferrous Metals

Aluminum prices have been on a relentless slide such that each week consumers (and no doubt producers) have asked how much further can they go? When the price was in the mid $2000’s we felt it could drop below the $2000 barrier but as time has gone by it has dropped even lower than we expected. Aluminum lost support on the back of falling demand, lower power costs and the strengthening US dollar. But one development that could push it even lower is the Chinese government’s review of their 15% export tax on primary metal.

As the world’s largest producer and consumer of aluminum, China’s role on the world stage can have a fundamental impact on supply and demand. With domestic demand falling and smelters being idled, the Chinese government is reportedly shelving their long term aim of reducing what are seen as energy intensive polluting industries and focusing on supporting any and all domestic industries. China currently has a 15% export tax on aluminum which if removed would immediately make exports over $200/ton more attractive to domestic producers and stimulate production. Traders believe if the tax is removed starting January 1, prices could plunge to $1200/metric ton.

–Stuart Burns

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