METAL MARKETS Firm sticking to its forecast of 57 cents aluminum

Prices for aluminum may currently be running in the 64 cents (US) per pound range, but a London, England, firm is sticking with its average price forecast of 57 cents for 1987.

“Following two years of relatively unspectacular free market prices, the early months of 1987 have been turbulent times for the aluminum market, the lme registering at one stage a 32-month peak of $1,335 per tonne,” writes Metals and Minerals Publications in its quarterly metals analysis and outlook.

“Price developments have dominated the market with views divided upon whether the rapid price escalation is largely technical or derives support from the metal’s fundamentals.”

The firm notes that while the current stock position is down, output is ready to rise and by mid-year a reversal in the stock decline should be apparent.

Mentioned in the analysis is the decision by the lme to allow trading of the 99.7% purity dollar denominated aluminum contract starting June 1, a move, the firm writes, which hopefully “will attract more metal to the exchange as well as give new life to the flagging comex contract by way of arbitrage.”

Aluminum, which traded at an average price of 65 cents in 1983, slipped to 57 cents in 1984 and 48 cents in 1985 before recovering somewhat to 52 cents last year.

“The underlying trend in the light metal’s fundamentals remains positive, with our balance table recording a third successive year of market deficit,” writes the firm.

“Additionally, our stock/consumption ratio for end-1987 at 1.6 months’ consumption is the lowest level since the 1979 rising market.

“With consumer stocks similarly at low levels, any sudden increase in offtake requirments or additional supply constraints could leave the market extremely tight.”

Meanwhile, Alcan Aluminum of Montreal has reported a $62 million(US) first-quarter profit, up almost twice from what it made during the same period last year.

Alcan shipped 800 fewer tonnes during the quarter compared with the same period last year but managed to boost profit margins on higher sales figures. The company, which made money in 1986 but showed a loss in 1985, has been on a cost-cutting drive the past two years.