Bank of America: London aluminum is expected to rise to $3,000 per ton in 2025

According to foreign news on June 24, industry analysts said that the global manufacturing weakness has dragged down aluminum prices, but the impact may be short-lived because of tight physical markets, including in China, a major consumer.

China is the world's largest aluminum producer, and its aluminum production is expected to reach 42.5 million tons this year, close to its annual production capacity of 45 million tons. Shortages in the supply of bauxite and alumina raw materials are expected to push aluminum prices back on the upward track.

LME three-month aluminum was quoted at around $2,520 a tonne on Wednesday, down 10% since hitting a two-year high of $2,799 a tonne last month.

Uday Patel predicts that there is a supply surplus of about 500,000 tons in the global primary aluminum market, and aluminum prices will average $2,450 a tonne this year.

But he added that the ban on Russian metal shipments to exchanges by the United States and Britain and logistical obstacles caused by the Red Sea shipping crisis could tighten supply.

Other analysts are more optimistic and expect a supply deficit this year, a view reflected in the physical market premium above the LME benchmark price.

Since late March, the duty-paid aluminum premium in the U.S. spot market has risen 10% to about $440 a tonne, while the duty-paid aluminum spot premium in Europe has risen 30% to around $340 a tonne over the same period.

“The faster growth in spot aluminum premiums in major consuming regions other than China suggests that the physical market continues to improve,” Macquarie analysts said in a report.

Macquarie expects global aluminum production to be about 72 million tons this year, with a supply-demand gap of 960,000 tons. China is expected to have an aluminum supply-demand gap of 2.26 million tons in 2024. This may mean that China’s aluminum imports will increase further.

Data showed that China’s aluminum imports in May increased by more than 60% year-on-year to 310,000 tons.

"Although there is limited upside in the near term, the aluminum market remains tight and LME aluminum prices should rise again once demand accelerates again," said Michael Widmer, an analyst at Bank of America. Michael Widmer expects the average aluminum price to be $3,000 per ton in 2025, with a supply-demand gap of 2.1 million tons. He predicts that the average aluminum price this year will be $2,500, with a supply-demand gap of 800,000 tons.

Created on:2024-06-26
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