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Aluminum Outlook 2020: Experts Call for Surplus in Years to Come

Investing News - As 2019 comes to a close, investors might be wondering what’s next for the aluminum outlook.


“We forecast the world ex-China market to move into surplus over the next few years. In the absence of a supply response, we project an uninspiring price outlook,” Shikvar said.

Wood Mackenzie forecasts an average annual London Metal Exchange (LME) aluminum price of US$1,752 per tonne next year.

Restarts in Canada and Brazil, expansion in Bahrain and the commissioning of SALCO’S 300,000 tonne greenfield project will move the market — excluding China — to a surplus of 700,000 tonnes.

“One could argue that it’s not that the ex-China producers are adding too much capacity, but simply that the demand outlook has deteriorated too much, too quickly to give producers a chance to assess their expansion plans,” Shikvar said.

According to Wood Mackenzie, the global demand picture continues to dampen.

“We estimate global demand to be flat this year followed by a tepid recovery at 2 percent in 2020,” Shikvar said.

Meanwhile, FocusEconomics analysts expect aluminum prices to rise slightly from current levels, largely thanks to healthy global demand.

“That said, an upturn in global supply — including the removal of an operational embargo on Alunorte in Brazil, the planned construction of a ‘green aluminum’ industrial park in Yunnan and the restart of Xinfa capacity in China — will restrain price increases,” states the firm in its report.

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