Analyst Sees Lower Aluminum Prices Through 2011
Aluminum prices are “deeply depressed” says analyst Lloyd T. O’Carroll at Davenport & Co., who forecasts world aluminum ingot to average 66¢/lb this year, down from an average $1.18 in 2006-2008, because of reduced demand and ballooning inventories.
O’Carroll sees a glutted aluminum market in 2009 and now projects global days of supply at 100 days in 2009, the highest level since 1993, because world purchases of primary aluminum ingot “currently is abysmal” and won’t rebound much until next year. He only sees ingot at 84¢/lb next year and 95¢ in 2011--“since supply and demand equilibrium won’t occur for two or three years.”
Only an average 13% of the buyers polled for the past six months by Purchasing.com have indicated an inclination to increase purchasing of aluminum products. And now, O’Carroll projects double-digit declines in shipments of mill products this year into the construction, transportation, consumer durables and machinery markets. Demand for aluminum in the construction market has been sliding since 2005, transportation since 2004 and durables and machinery since 2007. “We should see end-market demand at least stabilizing in 2010 and perhaps perking up,” O’Carroll suggests.
Looking at aluminum products overall, the Aluminum Association’s new orders index declined 7% in February from January and dropped 29% from February 2008. Orders for the flat-rolled products category, which includes sheet, plate, can stock and foil, were off 9.3% while order receipts for extruded products were down 4.9%. Orders for the much-smaller “other” mill products category, which includes drawing stock, electrical conductor and forgings, grew 11.9%.
In January, shipments of all aluminum products, including ingot, to U.S. customers from U.S., Canadian and offshore producers increased from the 1.39 billion lbs shipped in December to an estimated 1.44 billion lbs--but that was down 26.4% from 1.96 billion lbs in January 2008. While O’Carroll insists there is plenty of pent-up demand to be released during the recovery, he also says that probably won’t happen until 2010. So, O’Carroll says purchasing will drop 15% this year to 18.28 billion lbs from 21.43 billion in 2008, and then improve 7% in 2010 to 19.5 billion lbs. O’Carroll forecasts that world aluminum demand will drop 11% this year to 33.9 million metric tons from 37.9 million in 2008, but then will rebound 10% to 37.4 million in 2010.
O’Carroll sees a glutted aluminum market in 2009 and now projects global days of supply at 100 days in 2009, the highest level since 1993, because world purchases of primary aluminum ingot “currently is abysmal” and won’t rebound much until next year. He only sees ingot at 84¢/lb next year and 95¢ in 2011--“since supply and demand equilibrium won’t occur for two or three years.”
Only an average 13% of the buyers polled for the past six months by Purchasing.com have indicated an inclination to increase purchasing of aluminum products. And now, O’Carroll projects double-digit declines in shipments of mill products this year into the construction, transportation, consumer durables and machinery markets. Demand for aluminum in the construction market has been sliding since 2005, transportation since 2004 and durables and machinery since 2007. “We should see end-market demand at least stabilizing in 2010 and perhaps perking up,” O’Carroll suggests.
Looking at aluminum products overall, the Aluminum Association’s new orders index declined 7% in February from January and dropped 29% from February 2008. Orders for the flat-rolled products category, which includes sheet, plate, can stock and foil, were off 9.3% while order receipts for extruded products were down 4.9%. Orders for the much-smaller “other” mill products category, which includes drawing stock, electrical conductor and forgings, grew 11.9%.
In January, shipments of all aluminum products, including ingot, to U.S. customers from U.S., Canadian and offshore producers increased from the 1.39 billion lbs shipped in December to an estimated 1.44 billion lbs--but that was down 26.4% from 1.96 billion lbs in January 2008. While O’Carroll insists there is plenty of pent-up demand to be released during the recovery, he also says that probably won’t happen until 2010. So, O’Carroll says purchasing will drop 15% this year to 18.28 billion lbs from 21.43 billion in 2008, and then improve 7% in 2010 to 19.5 billion lbs. O’Carroll forecasts that world aluminum demand will drop 11% this year to 33.9 million metric tons from 37.9 million in 2008, but then will rebound 10% to 37.4 million in 2010.
quoted from: Purchasing.com
