Aluminum Global Glut to Decline 54%, Marubeni Says (Update2)

Dec. 4 (Bloomberg) -- The global aluminum surplus will narrow by 54 percent in 2010 from this year as China, the world’s largest consumer, leads a gain in demand as economies recover, Japanese trading company Marubeni Corp. said. The surplus of primary aluminum will narrow to 1.19 million metric tons from 2.57 million tons, Marubeni, Japan’s largest importer of the light metal, forecast in a report today. Aluminum for delivery in three months advanced to $2,166 a ton in London yesterday, the highest level since October 2008, as an economic revival improved demand for the metal used in cars and buildings. Growth in China’s economy, the world’s third-largest, may accelerate to 9 percent next year from 8.5 percent this year, according to the International Monetary Fund. “Chinese demand will keep growing under the government’s economic measures,” Yutaka Ishibashi, general manager at Marubeni’s light metals section, said at a briefing in Tokyo today. “The surplus in the global aluminum market will almost disappear in 2011.” Global demand for the metal will grow 7.6 percent to 37.6 million tons in 2010 after contracting 7.4 percent this year amid the global recession, according to Marubeni. World supply will increase 3.5 percent to 38.8 million tons next year, the company forecast. The pace of increase will lag behind the demand growth rate as high production costs discourage producers in North America and Europe to restart idled capacity, Ishibashi said. Price Forecast Marubeni forecast aluminum for delivery in three months on the London Metal Exchange will average $1,900 a ton in January to March. The price has averaged around $1,666 a ton so far this year, according to Bloomberg data. The metal traded at $2,127 a ton at 5:50 p.m. Tokyo time. Chinese aluminum supply will increase 16 percent to 15.5 million tons next year as rising metal prices encourage smelters to restart production, Ishibashi said. Demand is forecast to grow 8.6 percent to 15.4 million tons, leading to a surplus of 73,000 tons in the nation’s aluminum market, Marubeni forecasts. “We don’t expect much export coming from China next year,” Ishibashi said. “The Chinese market will be almost balanced.” Chinese imports of aluminum were 13 times higher this year than in 2008 as traders and manufacturers bought the metal in anticipation of demand from the government’s $586 billion stimulus spending. Refined aluminum imports swelled by 1,274 percent to 1.4 million tons in the first 10 months of this year, government data showed. Exports slumped 76 percent to 15,106 tons in the period. Chinese aluminum output will likely outpace demand by about 800,000 tons next year, the biggest surplus since 2005, Societe Generale said in a report last month. Following are details of Marubeni’s forecasts for primary aluminum supply and demand. Figures are in 1,000 metric tons. =============================================================== Year 2009 2010 2011 =============================================================== Total Supply 37,470 38,764 40,926 China 13,377 15,508 16,939 CIS 4,343 4,219 4,162 Middle East 2,522 3,281 4,027 Total Demand 34,904 37,574 40,914 China 14,213 15,435 16,901 U.S. 4,267 4,693 5,153 Japan 1,797 1,932 2,049 Balance +2,566 +1,190 +12