Natixis: Aluminum Surplus Will Go Away This Year

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Aluminum production has exceeded demand since 2007, but that surplus is likely to evaporate this year, according to a report from French financial-services firm Natixis. “In Russia and the West, producers continue to curtail unprofitable smelting capacity,” the report states. “In China, the growing influence of the price mechanism is likely to limit overcapacity.”

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Simon Constable of Barrons’ commodities corner writes that the cure for aluminum’s low prices seems to be those low prices themselves. “That’s standard free-market economic theory, and it appears to be playing out in the real world. After years of overproduction of aluminum and steady price declines, producers are starting to manufacture less of the metal, which is used in everything from packaging to auto parts to airplanes.”

On Monday, June 2, the day’s biggest mover was the aluminum cash price, which saw a 2.2 percent increase on the LME to $1,823 per metric ton. The Indian aluminum cash price gained 2.2 percent to finish at INR 111.00 ($1.87) per kilogram. At $1,856, the aluminum 3-month price finished the market day on the LME up 2.0 percent per metric ton.

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Chinese aluminum prices closed flat for the day. The price of Chinese aluminum scrap saw essentially no change for the fifth day in a row, remaining around CNY 12,250 ($1,960) per metric ton. The price of Chinese aluminum billet continues hovering around CNY 13,590 ($2,174) per metric ton for the fifth day in a row. For the fifth consecutive day, the price of Chinese aluminum bar held flat at CNY 14,200 ($2,272) per metric ton. The Chinese aluminum cash price saw little price change on Monday at CNY 13,300 ($2,128) per metric ton.

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