The aluminum market will go into a deficit already in 2017

In its latest report, BMI Research raised its 2018 aluminum price forecast to $ 2,000 per tonne from the previous forecast of $ 1,900 per tonne. Growth in demand, especially from China, will lead to deeper than previously predicted market deficits.

The trend, according to the company, will only intensify in the coming months. “Accordingly, we now project that the market will go into deficit in 2017 rather than 2018, and we forecast a steeper deficit of 295 thousand tons in 2018 compared to the previous forecast of 167 thousand tons.

BMI explains that higher prices next year are a natural progression of 2017's reaction to strong economic data from China. The Asian giant's financial performance pushed base metals in August and allowed aluminum to break the $ 2,000 /t barrier for the first time in three years.

“We previously identified this level as an indicator that aluminum has moved into a structurally higher trading range. Chinese authorities targeting the aluminum market will target significant capacity cuts in November 2017 to March 2018 as part of efforts to improve air quality. As of the end of October, we see that this development is mainly priced at aluminum prices. However, stricter adherence to cuts than we expect, namely a focus on active rather than just idle capacity, which is not compensated by new smelters, could lead to a significant reduction in aluminum production in China and further deepen the global deficit, thereby creating a risk of growth. prices in 2018, ”the report says.