LME aluminum seen sliding

Primary aluminum sold for an average 1.26/lb for the first six months on the London Metals Exchange (LME). For the year, Purchasingdata.com projects an LME cash buyer price of $1.25—which also is the same price projection of Global Insight of Lexington, Mass. (Last year, LME aluminum averaged $1.16/lb.)

Purchasingdata.com’s 2008 outlook is $1.13 for world aluminum, while Global Insight’s outlook is even lower at $1.10. Reason: Global aluminum output is growing at an annual rate of 11.4% (among the highest rates in 24 years) even though global industrial production is slowing, reports Harbor Intelligence in Laredo, Texas.

A dissenting voice is analyst Dan Brebner at UBS Securities in London, who projects a world price of aluminum at $1.40/lb—because of expected increases in raw material and energy costs. In a recent Bloomberg story, he pins the possibility of higher-priced aluminum metal next year on takeovers of Alcan in Canada and Sual Group in Russia— which may reduce aluminum production just as China, the world's largest supplier, reduces shipments to other countries.