DJ Vimetco: Aluminum Wont Benefit From Stimulus Packages Yet

LONDON, Apr 28, 2009 (Dow Jones Commodities News via Comtex) -- It could take as long as 15 months before the aluminum industry starts to feel the benefits of stimulus packages designed to kick-start ailing economies, Netherlands-based aluminum producer Vimetco NV (VICO.LN) said Tuesday. Aluminum demand has suffered in recent months because of its use in the key automotive and aerospace industries, both of which are struggling during the global economic downturn. The company said actions taken by governments to support local and global economies will play an "influential, if ambivalent" role for the aluminum industry in 2009. "On the one hand support for domestic production in excess of current demand may lead to increases in inventory levels and further pressure on prices," Vimetco said. "On the other hand, several governments have promised very large stimulus packages, mainly focused on infrastructure, which will increase demand for aluminum. However, this could take 12-15 months until the aluminum industry begins to feel benefits." Demand for aluminum is expected to fall by 2%-3% in 2009, with "no relief" for aluminum prices in the first half, the company said. "A sizeable inventory surplus is expected to grow throughout 2009, with aluminum prices remaining depressed until inventory levels start falling," Vimetco said. Vimetco has cut over 40%, or 395,000 metric tons, of its global aluminum production capacity due to weak macroeconomic prices and poor demand. The aluminum market is currently down some 58% at $1,428/ton since peaking at $3,380/ton in July.