Aluminum price forecasts boosted

By Tom Stundza

Primary aluminum prices are remaining stubbornly higher than many had forecast. Earlier this week, Midwest aluminum prices were about $1.32/lb, which reflects a 42¢/lb premium to London Metal Exchange (LME) prices. World prices averaged $1.27 in January, down from $1.40 in December, but higher than expected.

Early forecast consensus of 48 metals mavens put the 2007 price average at $1.14 a pound, down 2% from last year’s average of $1.16. But now, the consensus is rising and already is up around $1.20. The aluminum ingot price is influenced by general global economic demand and supply trends, which look to be in balance this year. But also by investment fund buying, which J.P. Morgan’s metals analyst, Mike Gambardella, says is adding a speculative premium to the LME primary aluminum price