TOKYO (Reuters) - Japanese trading firm Marubeni Corp said on Thursday a surplus of aluminium in the global market would ease in 2009 due to a drop in supply and a tepid recovery in demand as the financial crisis hurts global growth.
The global market surplus in aluminium would narrow sharply in 2009 and shrink more in 2010, as successive plans to cut supply due to slumping demand this year took effect, Marubeni said.
A drop in U.S. demand was expected to be much smaller in 2009 than this year, while the overall recovery in supply would be marginal, due to an expected tumble in U.S. supply and a much tamer rise in Chinese supply compared with 2008, it said.
"Supply reductions haven't caught up with this year's rapid slackening in demand, and as supply cuts will continue the supply/demand balance will improve considerably in 2009," Yutaka Ishibashi, general manager at Marubeni's light metals section, told a news conference.
"China holds the key to the 2009 balance, and as a market deterioration began late this year, China's demand will likely be sluggish for a while next year," he said. "As the global market stablises, demand will pick up in 2010," he said.
There would be limited growth in supply due to delays in many large-scale production projects, while new refineries in the Middle East were expected to be launched as scheduled, he said.
Marubeni said a global surplus of 534,000 tonnes was forecast for 2009, down from an expected surplus of 1,257,000 tonnes this year. A surplus of 346,000 tonnes was expected for 2010.
Global demand for primary aluminium is expected to rise 2.9 percent to 39.98 million tonnes in 2009, while supply is expected to inch up 1 percent to 40.5 million tonnes.
In 2010, global demand is expected to rise 6 percent from 2009 to 42.39 million tonnes, while supply is expected to rise 5.5 percent to 42.74 million tonnes.
Marubeni said aluminium prices had been hit hard by the deepening downturn in global economies and a bleak growth outlook, as well as investors dumping assets for cash as risk aversion intensified in the wake of the global financial crisis.
Inventories were expected to keep rising into 2009 but the buildup was likely to moderate later in the year as supply tightened, the company said.
Benchmark three-month London Metal Exchange aluminium futures were expected to average $2,100 a tonne in 2009 and move in a range of $1,700-$2,500 during the year.
In 2010, three-month LME futures are forecast to average $2,400 and likely to move in a range of $2,000-$2,800.
On Thursday, key three-month LME aluminium MAL3 was trading around $1,810, down about 30 percent from around $2,550 a year ago.
Following are details of Marubeni's forecast for primary aluminium supply and demand in 2009 and 2010, with a comparison against estimates for this year and last year (in 1,000 tonnes).
Western world in the table means countries in free-market economies. Eastern world includes China, Eastern Europe and the CIS.
Year 2007 2008 2009 2010
Total supply 37,998 38,862 39,982 42,394
Total demand 37,674 40,119 40,516 42,741
Balance +324 +1,257 +534 +346
Following are regional breakdown of primary aluminium supply
(in 1,000 tonnes):
Year 2007 2008 2009 2010
Western world
North America 5,716 5,703 4,941 4,839
of which USA 2,588 2,638 2,137 2,035
West Europe 4,695 4,841 4,677 4,548
South America 2,583 2,664 2,675 2,704
Asia 1,451 1,560 1,798 1,951
Oceania 2,311 2,291 2,316 2,337
Middle East 2,018 2,164 2,518 2,991
Africa 1,822 1,680 1,772 1,772
Eastern world
East Europe 467 481 376 376
CIS 4,536 4,872 5,018 5,119
China 12,400 13,865 14,426 16,105
Following are regional breakdown of primary aluminium demand
(in 1,000 tonnes):
Year 2007 2008 2009 2010
Western world
North America 6,777 6,293 6,280 6,569
of which USA 5,867 5,472 5,461 5,712
West Europe 7,076 7,161 7,118 7,296
Japan 2,316 2,279 2,256 2,301
South America 1,247 1,346 1,391 1,471
Asia 3,888 3,929 3,941 4,059
Oceania 428 427 418 423
Middle East 1,148 1,242 1,301 1,386
Africa 439 454 471 493
Eastern world
East Europe 996 1,045 1,075 1,127
CIS 1,059 1,147 1,212 1,299
China 12,300 13,540 14,518 15,970