Goldman Sachs and CRU Divided Over 2017 Aluminum Price Outlook

Published: May 5, 2017 10:52

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Goldman Sachs recently expressed optimism over this year’s aluminum price trend, while CRU expected lower prices than Goldman Sachs.

SHANGHAI, May 5 (SMM) –Goldman Sachs recently expressed optimism over this year’s aluminum price trend, while CRU expected lower prices than Goldman Sachs.

Goldman Sachs sees aluminum prices at $2,000/tonne in coming six months and $2,100/tonne in coming twelve months. Goldman Sachs’ confidence came from China’s supply side reform in aluminum industry in coming months.

Goldman Sachs: Supply Side Reform to Lift Aluminum Prices

China started aluminum supply side reform in April this year, through production controls and closure of illegal capacity. The Ministry of Environmental Protection decided in early April to carry out one-year air pollution prevention & control enhanced supervision work in Beijing, Tianjin, Hebei and surrounding 28 cities and plans to control output during winter heating season. Statistics from Antaike showed aluminum capacity in those 28 cities total about 12.4 million tonnes, accounting for 33% of total capacity in operation nationwide. Changji, Xinjiang, ordered closure of 2 million tonnes of illegal aluminum capacity on April 14. It is expected that closure of illegal aluminum capacity will be carried out in Shandong and other regions in the future.

Not every analyst is as optimistic as Goldman Sachs, though. Mike Southwood, Analyst at CRU, predicts the average aluminum price at $1,830/tonne in 2017, saying that a series of risks and factors will trigger big swing in aluminum prices.

Despite control over new capacity in Changji, commissioning of new capacity in other regions will add to supply pressure in aluminum market, Citic Securities said.

On the demand side, market lacks new growth point, Citic Securities added.

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Goldman Sachs aluminum prices CRU 2017 aluminum price forecast

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