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Sumitomo sees deficit for aluminium next year.

Issued at 2014-02-26



Bloomberg reported that japanese trading house Sumitomo, which has stakes in smelters from Brazil to Australia, forecasts aluminium will swing into a deficit next year for the first time since 2006 as lower prices accelerate output cuts.

Global demand will outpace supply by 37,000 tonnes from a surplus of 312,000 tonnes estimated for this year, said Shingi Yamagiwa, manager of light metals trading at Sumitomo.

Aluminium prices are down 18% over the past year on the London Metal Exchange (LME). Top producers including Rusal, Rio Tinto and Alcoa have announced output cutbacks.

China has tried to curb the capacity of its plants that account for almost half of world output, weighing down prices in a market that is oversupplied. "Western producers will continue to cut output, while China will adjust its production soon, as the price of electricity pressures high-cost smelters," Mr Yamagiwa said in an interview.
Mr Yamagiwa said that premiums to Japan are expected to jump to a record USD 375 per tonne in the Q3 from about USD 255.5 per tonne this quarter on soaring fees in the US. The fee is settled on a quarterly basis in Japan.
Moreover he said that record LME inventories also supported the premiums. Aluminium stockpiles tracked by the LME reached a record high of 5.49 million tonnes on January 16. About 80% of stockpiles may be tied in transactions that make the metal unavailable to buying.


Source: Aluplanet



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