Japan Industry Expects Aluminium Price at US$ 2,200-2,700/t for 2H

Japanese aluminium re-rollers and dealers expect primary aluminium ingot price at London Metal Exchange (LME) could fluctuate around US$ 2,200-2,700 per tonne during half year to March 2007, which would not become so strong to reach US$ 3,000 again, according to survey questionnaires by Japan Metal Bulletin.

Masumi Hosaka, general manager of raw material department in aluminum & copper company of Kobe Steel, estimated LME aluminium price could fluctuate in the range at US$ 2,200-2,700 per tonne for 3-month future price and at US$ 2,150-2,650 for cash price toward March 2007. He said aluminium market seemed balanced at around US$ 2,500 and was unlikely to try US$ 3,000 again with such factors as slow down of US economy and Chinese expansion of alumina production.

He analyzed world primary aluminium supply would shorten by 200,000-300,000 tonnes against demand through 2006 and become surplus by about 200,000 tonnes in 2007 with expectation US and Chinese demand might become slower. He said Japanese premium price for primary aluminium ingot would turn to the decrease when Japanese demand is not so strong, world supply becomes surplus and China should maintain the exporter stance.

Hiroshi Adachi, general manager of Marubeni’s light metal section, forecasted LME aluminium price would fluctuate in the range at US$ 2,200-2,700 per tonne toward March 2007 and the center price could become to US$ 2,300-2,400 when the price could temporarily decline due to aluminium industry’s account settlement at the end of fiscal year.

He said that the market price would not fluctuate widely with supply and demand factors when both supply and demand are stable worldwide and that the price could be supported by consumptive interests at around US$ 2,400.

However, he said, primary aluminium ingot price could decline in the case alumina price decreases, the material for primary aluminium. International alumina spot price is weakening under the easy supply condition and China is expanding its alumina production with domestic procurement and mass import of bauxite.

He estimated Japanese premium price for primary aluminium would be settled at over US$ 70 without plunge.