Aluminum prices are poised to slide

The slight downward trend in aluminum prices persists. And, “from the fundamental, seasonal and technical standpoint (the predictable components of this market), aluminum prices should continue to head slightly lower,” forecasts Harbor Intelligence in a note to clients. Reason: World supply is expanding while demand has stalled, boosting world stocks by 4.5% over last year.

Aluminum averaged $1.39/lb in May but the research house’s monthly technical indicator has given off bearish confirmation of imminent declines. Harbor Intelligence expects that today’s world market price on the London Metal Exchange (LME) of $2,755/metric ton ($1.25/lb) will head toward $2,750 ($1.247) and then toward $2,720 ($1.23). This is only slightly more bullish than Davenport Equity Research’s view that the world aluminum primary ingot price this year will average $2,700 ($1.22).

Aluminum prices have received downside pressure from news that Ormet has restarted its fifth potline and is planning to restart its sixth potline by September. “We should expect prices to continue to slowly trend lower for the rest of the year,” says the report. “Nevertheless, prices will not fall that much given still low aluminum inventory levels in terms of weeks of consumption, a weak dollar, a bull market in nickel, lead and tin, still high copper and oil prices, and stable interest rates in the U.S.”