Reuters reported that Aluminium prices are likely to remain in a range of USD 1,800 per tonne to USD 2,400 per tonne for at least the next 2 years as production increases are offset by rising demand.
The aluminium rolled products producer expects a weeks long drop in aluminium stocks on the London Metal Exchange to continue as global consumption grows at 10% in 2010 and 5% in 2011 but without pushing prices outside of the range.
Mr Erwin Mayr chief strategy officer at Atlanta based Novelis said that "Over the last 12 months, the LME was very stable between USD 1,800 and USD 2,400 if I make a broad range."
Mr Mayr said that globally, yes there are a lot of primary projects in the pipeline. On the other hand, if you look at demand projections, they are equally strong probably even stronger mid and long term.
He added that should the price fall below USD 1,800, it would force many Chinese producers out of operation while prices above USD 2,400 would offer huge returns for the lowest cost smelters. In that case, investment in production would be likely to increase.
Metal traders said that Deutsche Bank was preparing to follow the world's top aluminium producer, Russia's UC RUSAL in considering an aluminium exchange traded product. Such a move could tighten the aluminium market, where inventories are still close to record highs of 4.6 million tonnes set in January. Around 75% to 80% of them are estimated to be tied up in financing deals.
Mr Mayr said that "These things are coming. To what extent they will gain significant size and therefore will play a major role in locking up a large amount of inventories time will tell."
He said that short term we see all regions are growing quite substantially. He added that Chinese aluminium consumption would remain strong given levels of spending on infrastructure and the auto industry.
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