ALUMINUM LIES LOW
China has an appetite for aluminum, but unless the rest of the world joins China at the table, prices for the commodity are likely to stay low in 2003. That was the opinion of one speaker who made remarks at the Aluminum Spotlight session at the Institute of Scrap Recycling Industries Inc. (ISRI) Annual Convention earlier this month in Orlando.
Colin Pratt of CRU International, London, noted that although aluminum has a reputation as a material growing in popularity, in real terms its price has been falling steadily for some 40 years.
That trend is not likely to be bucked in 2003, Pratt predicted, in part because demand will not increase enough to dramatically eat into excess supply.
There are even some concerns that the part of the demand equation taken for granted—China—could be running out of steam. "There is the issue of macro-economic stability in China," said Pratt. "It used to be when America sneezed, the world caught cold. Pretty soon we’ll be saying that about China," he remarked.
But even slow growth in China will probably mean more aluminum production and consumption moving there. Pratt said that the nation is putting more production capacity online, and will be able to produce aluminum profitably with cheap, abundant energy.
This provides an additional reason why idled smelters in the U.S. Pacific Northwest "will not re-start any time soon," according to Pratt.
Scrap dealers in North America are finding waiting markets in China, although the overall commodity pricing means the tightness of scrap is not driving prices upward.
For 2003 and 2004, Pratt sees LME aluminum pricing staying in the 58 cents to 60 cents per pound range as a typical average. "There will be a lid on pricing until Chinese [new smelter construction] levels out," he commented.