Morgan Stanley raises 2015 Aluminum price forecast by 8%

Author: Paul Ploumis
08 Oct 2014 Last updated at 06:33:41 GMT
SEATLLE (Scrap Monster): Morgan Stanley has upgraded the price forecast for Aluminum for 2015 by 8%. The financial service major has also increased the current year's price forecast by 3%. This is on account of the boost in aluminum usage by the automotive industry around the globe, especially the US. Moreover, Morgan Stanley also believes that supply is most likely to subside further as more producers turn to production cuts.

According to the latest report by Joel Crane, the price forecast for this year has been increased to $1,893 a ton, 3% higher than the previous forecast. Also, Aluminum prices will touch $2,072 a metric ton in 2015, he added. The global surplus of Aluminum will be 620,000 tons this year. But the surplus will narrow down to 310,000 tons in 2015 and 280,000 tons in 2016. The report further states that the global Aluminum market will swing to 230,000 tons of deficit in 2017.

The cut in production coupled with strong demand growth presents a bright future for the metal. The global aluminum demand is expected to grow 6.6% in 2014 and 7.4% in 2015, mainly on the back of increased demand from US car industry and strong consumption growth in China. The increased use of aluminum in F150 by Ford will boost the demand in near term. Another automobile major Toyota has already announced its plans to use more aluminum in 2018 model of Camry.

Global demand will climb 6.6 percent this year and 7.4 percent next year as carmakers, mostly in the U.S., increase use of the metal and growing consumption in China, the bank said. The increased use of aluminum in Ford Motor Co.'s new F150 is a “boon for aluminum demand” and Toyota Motor Corp. plans to use more of the metal in its 2018 Camry, it said.

Morgan Stanley has raised the current year estimates fort Nickel and Zinc by 2% each. The 2015 price forecast for copper was cut by 3 percent to $7,176 per ton.