Aluminum industry may face deficit in 2015, says Sumitomo Corp.

17 Feb 2014 Last updated at 01:34:19 GMT

TOKYO (Scrap Monster): The Japanese trading house Sumitomo Corp predicts the aluminum industry to turn to a deficit in 2015, the first time since 2006. The sharp fall in aluminum prices have cut back production. The London Metal Exchange (LME) aluminum prices had registered a fall of 18% in 2013.

The Tokyo-based company that predicts a surplus of 312,000 tons in 2014 forecasts a deficit of 37,000 in 2015. The Western smelters will continue to cut output, while Chinese output will also reduce considerably.

Rio Tinto, Alcoa and Rusal- world’s three leading aluminum producers have already announced to cut their output during this year. BHP Billiton plans to close its South African aluminum smelter. Added to these are the fears that China-which accounts for almost 50% of the global aluminum production, may cut back production during the year.

The short supply of aluminum will lead to higher prices. The prices have already shown signs of improvement during the initial months of 2014. LME aluminum prices have climbed to above $ 1,700 per ton, mainly aided by the improved Chinese manufacturing data.

The aluminum demand from automotive sector is expected to show huge growth in the coming years.

Author: Paul Ploumis