Japanese aluminium association head sees metal price at USD 1,500-USD 1,700 per tonne – Mr Hamaji
Mr Akio Hamaji, new chairman of the Japan Aluminium Association said, said that aluminium prices are likely to hover between $1,500 and $1,700 per tonne for the later half of this year as oversupply will cap further gains.
Mr Hamaji said that "With uncertainty over the European economy after Brexit, it is unlikely to see a strong pickup in global economy."
He said that "So I don't expect sharp gains in the metal prices," adding aluminium supply is expected to exceed demand in the global market this year which will weigh on the market.
Benchmark aluminium prices on the London Metal Exchange (LME) have gained 11 percent this year, confounding some analysts who had expected the market to be hit by overproduction and high levels of inventories. The benchmark stood at around $1,680 per tonne on Thursday.
Asked about the outlook for Japan's premiums, Mr Hamaji, also president of Mitsubishi Aluminum, said they will stay near their current levels.
Japan is Asia's biggest importer of aluminium and the premiums for primary metal shipments it agrees to pay each quarter over the LME cash price set the benchmark for the region.
Japanese buyers have agreed to pay producers a premium of $90 to $93 per tonne for metal to be shipped in July-September, as much as 23 percent less than the previous quarter, on weaker spot premiums.
He said that "Aluminium demand in Japan is steady. But as our government cut its forecast for economic growth, it's hard to imagine local demand picking up sharply and the premiums jumping from here."
Japan's government on Wednesday cut its forecasts for economic growth.
Mr Hamaji said, however, further losses in the premiums will be limited if metal demand recovers in Southeast Asia and stabilises in top buyer China.
The association forecast in March the country's rolled aluminium output will stay flat at above 2 million tonnes in the year to March 2017, as higher auto demand ahead of the planned sales tax hike offset weaker demand for window frames.
Source : Reuters