Aluminium may outperform other metals next year Prices up 28% so far, likely to average at $4,500/t next year

Print this page Posted on : 04-23-2008 by recycleinme.com

April 22 Aluminium prices will outperform other base metals next year to reach a record, as supplies will be constrained by energy shortages amid rising demand from China, the world's largest consumer, according to Barclays Capital. Aluminium futures in London may rise to average $4,500 a tonne in 2009, Mr Gayle Berry, an analyst at Barclays Capital, said at a conference in Beijing. Aluminium, used in the production of automobiles and aircraft, has risen 28 per cent so far this year, averaging $2,818 a tonne and nearing a record of $3,310 reached in May 2006.

Prices of other industrial metals such as copper, while remaining high, will stay below historical peaks, Mr Berry said.

"Aluminium has been the most affected by energy-related supply losses" as it is the most power-intensive to produce, he said. Production loss of the metal due to power shortages from Africa, China and the rest of the world has amounted to 721,000 tonnes, or 2 per cent of last year's total output, she said.

Aluminium production growth has peaked in China, which is set to become a net importer of the metal this year, weighing on future expansion in global supply, Mr Berry said.

Supply hicks

Increasing tightness in the global market will result in a global deficit in 2009, she said.

Copper, lead and zinc production were also cut in China and Africa due to energy shortages, said Mr Berry. "It does highlight China is not only a demand story, but also a potential supply side risk," he said. In China, which accounted for 94 per cent of global consumption growth for the metal in 2007, environmental and safety concerns have led to closures of small coal mines and exacerbated a shortage of the commodity on which China depends for over 80 percent of power generation. South Africa faces electricity shortages for seven years, and the country's target of cutting power consumption by 10 per cent won't be enough to end the shortage, according to State-owned power utility Eskom Holdings Ltd.

Source : Business Line