Last week, MetalMiner’s own Stuart Burns decided to take a closer look at aluminum. “How much more can it fall?” he asked, and proceeded to answer his own question. Prices, he reported, can still plunge. Recent reports prove his prediction correct. Just this week, aluminum prices hit a four-and-a-half-year low, dropping to 66 cents per pound on the London Metal Exchange. The December “month-to-date average” now reaches 70 cents.
As MetalMiner previously reported, lower demand takes the fall for these plunging prices, and analysts can pin the problem on automotive and construction industries. Since motor vehicle sales dropped 16.3 percent during November, falling to 12.3 million units, aluminum purchasing has taken a slide. Read Lisa’s recent article for more information on the plight of the automotive industry, since the plight of the automotive industry will continue to affect aluminum. Overall, analysts expect aluminum purchasing to drop at least six percent this month.
Purchasing.com analyzes aluminum’s future in North America: “Mill shipments of aluminum sheet and plate by U.S. and Canadian producers of 680 million lb. during October were down 10.2 percent from the same month last year, according to data supplied by the Aluminum Association in Arlington, Va. Shipments of aluminum extruded products by U.S. and Canadian producers totaled an estimated 254.5 million lb. during October, a year-over-year drop of 18 percent.”
Demand could eventually pick up, but more problems still await. As the aluminum surplus grows, it might take even longer for aluminum prices to reach a higher, steady point.