BNP Paribas sees LME Aluminum prices to remain bearish

UNITED KINGDOM August 30 2013 10:50 AM

LONDON (Scrap Register): LME Aluminum prices are likely to remain weak as a large structural surplus more than makes up for strong demand, said BNP Paribas in a research note.

The firm estimates global aluminum demand growth in 2013 at 6%, in line with the long-term trend. But unless output falls, prices will remain subdued.

The bank forecasts total inventories may have ended the first half of 2013 at 13 million tons, or around 13 weeks of demand.

“It remains difficult to be positive about aluminum's price prospects, and our forecasts published on May 22 of an average of $1,910/t in 2013 and $2,000/t in 2014, look on the high side,” they added.

Further, the firm expects the LME's proposal to address warehouse waiting times to further reduce physical premiums.

“Given the poor fundamentals, the LME price may not rise to fully compensate for lower premiums,” BNP concluded.