International aluminium prices, after rallying in April, are expected to ease in the months ahead, as the effect on prices of the US sanctions on UC Rusal partially wane. In addition, increased supplies from China due to easing of environment restrictions would boost global supplies, exerting downward pressure on prices.
Research by FocusEconomics sees aluminium prices on the London Metal Exchange (LME) moderating to $2,146 per tonne in the last quarter (October-December) of calendar year 2018. For the same period of calendar 2019, the price outlook is a tad bullish at $2,175 a tonne. LME prices for the cash buyer on May 18 were ruling at $2,296 per tonne.
Worldwide demand for aluminium will grow as the transition of the Chinese economy to a less investment-intensive growth model will be gradual, FocusEconomics said in its forecast for the aluminium sector.
“Aluminium prices may soften further but in India, demand continues to be strong. Our aluminium consumption has been ahead of production”, said T K Chand, chairman & managing director, National Aluminium Company (Nalco), and president of the Aluminium Association of India.
US decision to clamp sanctions on Rusal in early April sent aluminium markets into a turmoil. As Rusal produces six per cent of the world’s aluminium output, fears of a supply shortage seized the market, rocketing the white metal prices to multi-year highs. On April 19, aluminium on the LME peaked to its seven-year high of $2,718 per tonne. The situation prompted the US to reconsider the scope of its sanctions. Accordingly, the US government extended the deadline for Rusal to clear its piled-up inventory to October and withdrew secondary sections. As the US mellowed its stance on Rusal, it allayed fears on supply disruptions and pushed prices down. Aluminium prices faced further downward pressure from weaker than expected readings for industrial production in China in March and weakening sentiment in US manufacturing sector in May.