Nalco Ups Aluminum Price Forecast on Supply Declines

June 17 (Bloomberg) -- National Aluminium Co., India's biggest state-owned producer of the metal, raised its price forecast for this year because of supply shortages. The second-best performing industrial metal this year may average between $2,800 and $3,000 a metric ton, compared with an earlier forecast of between $2,500 and $2,800 a ton, Chairman C.R. Pradhan said today in a telephone interview from New Delhi. That compares with an average of $2,867 a ton so far this year, which is 7.6 percent more than the average $2,663.94 a ton in 2007. China, the world's largest consumer and producer, may be a net importer of as much as 1 million metric tons by 2012, CRU International Ltd. said last month. London Metal Exchange aluminum for delivery in three months has risen 24 percent so far this year, nearing a record of $3,310 reached in May 2006, as power shortfalls in China and South Africa reduced output. ``Power problems have restricted supplies while demand is buoyant in Asia,'' Pradhan said. Alumina, which is smelted into aluminum, will likely trade between $350 and $400 a ton, he said. China will probably lose about 600,000 tons of production this year after the worst snowstorms in five decades closed power stations and smelters, Standard Bank Group Ltd. said April 2. The metal may rise to more than its 2006 record, the bank said. Metal inventories are set to remain well below historical averages this year following relatively healthy demand and insufficient supply additions, which should support prices, according to Lehman Brothers Holdings Inc. The historical average of aluminum inventories is 5.43 weeks of demand, and may reach 3.34 weeks by the end of the year. At 1,068,650 tons, aluminum stockpiles are currently around 3.92 weeks of demand, Michael Widmer, Lehman's director of metals research, wrote in a report released today. Aluminum for delivery in three months rose $25, or 0.8 percent, to $3,000 a ton as of 2:27 p.m. India time on the London Metal Exchange.