Aluminum Prices Driven by Financials -Norsk Hydro

BARCELONA, June 15 -- Norsk Hydro's (NHY.OL: Quote) chief financial officer said on Tuesday that financing deals were helping to drive aluminum prices but they still had performed poorly compared with other base metals.

"There seems to be a willingness to invest in these inventories to keep them off the market, with returns that can be locked in, therefore you have the prices that you have," Jorgen Rostrup told the CRU World Aluminum Conference in Barcelona.

"It is still a tight aluminum balance in the physical market. That is part of what sets the price, but obviously the price is also set by financial things," he added.

Metal industry sources estimate these deals have tied up a hefty 70 percent or 3.3 million tonnes of record high aluminum stocks -- 4.7 million tonnes in London Metal Exchange-registered warehouses.

Difficulty in accessing LME aluminum is also part of the reason why prices of the benchmark three-month contract CMAL3 rose to above $2,800 a tonne, the highest since August 2008.