Aluminum prices are expected to remain low during the 2013-14 period. As such, aluminum prices are forecast to decrease by about 6% year-on-year to $1,900 a metric ton on average in 2013 and to somewhat recover to $2,000 a ton on average in 2014.
Aluminum prices are projected to remain well below the long-term price assumption of $2,250 a ton in each of 2013 and 2014, mainly due to the market's high inventory levels and production overcapacity. Aluminum’s long-term price outlook is expected to be largely determined by supply-side factors. The current weak price environment is leading to temporary or permanent closures of several smelters. But the supply loss would be partly offset by significant lower-cost capacity increases from the Middle East, China and India.
The metal's long-term demand trend is on the upside as China's per capita consumption rises. In parallel, LME Aluminum High grade 3-month future prices increased by 2.8% in September to $1,825 a metric ton, Copper Grade A 3-month future prices rose by 2.8%, Nickel 3-month futures prices improved by 1.1%, while prices of Zinc futures increased by 0.7% to $1,918 a ton in September 2013.
Fitch Ratings, Byblos Bank Research