Reuters reported that Russia's UC RUSAL believes that the metal may reach USD 3,000 per tonne by the end of this year due to the earthquake in Japan and events in Northern Africa.
Mr Maxim Sokov RUSAL's director for strategy said that there is a chance, that they can very well hit USD 3,000 maybe by the end of the year. This year the average aluminum price will be above USD 2,600. The recent events in the world support our positive estimate of developments. Both what happened in Japan and Northern Africa.
Mr Sokov said that the earthquake will lead to an increase in demand for metals to rebuild the destroyed infrastructure. That will raise demand for aluminum, steel and nickel. The conflict in oil rich Libya also pushes up the price of energy a key component in the price of aluminum. Strong demand for different aluminum based financial instruments restricts available physical aluminum volumes to be used in construction and in rebuilding Japan's infrastructure.
He said that he expected a physically backed aluminum ETF to be launched in the second quarter of this year. Serious work is on to create an ETF. We expect that in the Q2 of this year it will be implemented. However, that the new ETF may prevent some aluminum volumes from London Metals Exchange warehouses from being consumed. Probably 70% of all LME stocks in the second quarter will stop being available for consumers.
Mr Sokov said that the process of decoupling the price of alumina, an intermediate product for aluminum smelting has begun. Alumina prices have started rising faster than those of aluminum. We for our needs, calculate the price of alumina based on CRU and Metals Bulletin Platt's data basket. At a certain stage I think this will assume a global form.
He said that to set the alumina price an index will be formed which will not be traded on the LME. Then it may assume some other form closer to those of aluminum.
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