Aluminum Outlook Becomes Supportive

Kitco News.com reports that Barclays predicts a supportive short-term picture for Aluminum.

The editorial is quoted as saying:

Barclays Capital describes a supportive picture for the global aluminum market, at least for the short term. The bank looks for the market to be in a 556,000-metric-ton deficit in the current quarter, then broadly balanced in the first half of 2011. Its subsequent price expectations are for aluminum to average $2,480 a ton in the fourth quarter and $2,575 in the first half, which means “clear upside” from current prices. “The notion that aluminum fundamentals offer a story that could be classified as ‘bullish’ has been somewhat alien for the majority of this year,” Barclays says. The debate during the first half was the size of the market surplus. “How times have changed though.” Demand has exceeded expectations, Barclays says, with a year-on-year rise of 19% for 2010 so far. Furthermore, in the first quarter of 2011, Barclays says it looks for China to reverse its aggressive destocking cycle. Meanwhile, government efforts to meet energy efficiency targets, alongside rising production costs, have constrained aluminum production in China. The bank estimates that 3 million tons per year of aluminum capacity is currently off-line, with the power curbs contributing to 600,000 tons of lost production in the fourth quarter.

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