Aluminum prices growth dynamics will be better than copper

On October 12th 2009 the analysts of Deutsche Bank published the research containing the tendencies and prospects of world aluminum industry development. According to the forecast aluminum prices in 2010 will show better dynamics than other metals. At that the forecast of the Deutsche Bank analysts very much differs from other experts’ opinion. According to the analysts, many experts do not take into account new finance reality and inflation pressure in raw materials markets, although the excess of aluminum in the market is included into current price for the metal. The analysts of Deutsche Bank expect that such finance support to the market can be the base for significant aluminum prices growth in future, comparing to copper. Low interest rates and low risks of the metal possession make aluminum an ideal tool for hedging, Deutsche Bank notices. Although aluminum prices can be under pressure in the beginning of 2010 due to the demand decrease, experts believe that the metal prices will show better dynamics in this situation. Stocks refill by Western companies and strong demand in China support the market today. However, as per the experts’ opinion, this tendency will not last for long. Analysts expect the demand weakening in the H1 of 2010. Aluminum market will be well supplied by the metal during next several years. But the excess will decrease and new factors will support the market. Deutsche Bank analysts said that the demand growth from financial institutions, banks and funds which compete with traders as for futures as for physical volume of the metal. Financial institutions today own up to 65% to 75 % of all aluminum stockpiles at LME. In fact, this metal is inaccessible for the market participants. The volume of the metal removed from the market is estimated as 3 million tones to 3.5 million tonnes. This situation is to remain unchanged in nearest future. Moreover, Deutsche Bank analysts assume that some financial institutions may event increase the volume of such positions. That is why the perspectives of aluminum market will be underestimated by the most experts. Aluminum prices growth dynamics will be better than that for copper which is forecasted by most analysts. (Sourced from Rusmet)