BofA Merril Lynch Lowers Aluminum Prices Forecasts Wednesday September 4, 2013 1:31 PM Proposed changes to London Metal Exchange warehousing regulations and investigations by U.S. authorities into the aluminum market are leading to volatility in the market, says Bank of America Merrill Lynch. They are lowering their 2013 and 2014 aluminum price forecasts by 3% and 10% to $1,863 a metric ton (84.5c/lb) and $1,775 (80.5c/lb), respectively, based on smelting overcapacities and the risk that market participants choose, or are forced, to exit positions. Their 2015 forecast was left unchanged at $2,150/t (97.5c/lb). “Warehouse financing deals have sheltered the aluminum industry from taking painful decisions and closing capacity. As a result, capacity utilization rates remain below longer-term averages. While production curtailments (outside of China) helped rebalance the market this year, production increases scheduled for 2014 threaten to push the market back into surplus. If that came to pass, prices and premia should fall. This would force the industry to show more discipline. Eventually, that would put aluminum on a stronger footing fundamentally,” they say.
Posted on: Thu, 05 Sep 2013 00:17:36 +0000
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