Japan aluminium consumers, traders see lower LME prices in 2007

Japanese aluminium consumers and traders contacted by Platts said they saw London Metal Exchange aluminium price levels falling in 2007, with the exception of Kobe Steel officials projecting LME three-months at $2,800-2,900/mt.
    
Japanese trading house Marubeni announced a 2007 price forecast this week, putting the LME three-months price estimates at $2,000-2,700/mt. The metal traded in a range of $2,258-3,240/mt so far this year. Hiroshi Adachi, general manager of Marubeni's light metals department, said the LME prices would not move in just one direction, but would stay supported at a lower level compared to this year, on the back of steady demand. Marubeni sees the global primary aluminium ingot demand rising by 5.8% year on year in 2007, and the supply growing at a faster pace of 7.0% with several plants in Europe expected to come on-stream in 2007.
    
Other trade and consumer sources agreed about the softer price prospects in 2007. One Japanese trader said some Western producers during the previous premium talks held in September this year indicated a range of $1,900-2,300/mt as the possible LME prices in 2007. Other sources mostly indicated $2,000-2,700/mt, the same range as Marubeni. "I see high prices discouraging demand, and the prices would fall," one consumer said.
    
Meanwhile, Hiroyuki Nakayama, senior managing director of Kobe Steel, said he saw the LME three-months at $2,800/mt in 2007. "We are making our corporate plan based on a projection, ingot at $2,800/mt or Yen 300,000/mt," Nakayama said. Kobe Steel operates rolling aluminium mills and produces canstocks, molded and casted materials. 
    
He said the global aluminium smelters are not increasing the ingot outputs as expected, and that the demand for the metal in China would stay strong, supporting prices at $2,800/mt. He added the recent Rusal-Sual merger indicated the market would have a handful of suppliers and firm prices.  

Nakayama also said his company is currently in negotiation with customers to change the price formula of rolled aluminium products.