Marubeni sees 2014 LME aluminium prices rising, at 1,950-$2,300/T in Q4

 

"We have more bullish views for 2014 than some financial institutions that made forecasts," Takeshi Kondo, general manager at Marubeni's light metals section, told reporters on Friday.

 

LME aluminium prices have lost almost 14 percent this year to trade close to $1,800 a tonne on Friday, and Marubeni forecast they will be between $1,950-2,300 in the fourth quarter next year, moving up from an expected $1,750-1,950 range in the first quarter.

 

"Financial deals will likely continue even after the LME warehouse rule change. And recovery of the U.S. economy and steady growth in emerging countries such as India, Thailand and Indonesia are expected to boost the metal prices late next year," Kondo said.

 

Aiming to appease critics of its global storage network, the LME in November slashed maximum wait times for metal, boosted its powers to act against market abuse and said it would review its agreement with warehouse owners. 

 

But use of material for collateral in financing deals are persistent, squeezing availability of the metal and lifting premiums - or costs to get metal out of storage - in the United States and Europe. 

 

Marubeni, a major trader of aluminium in Japan, however, expects higher prices of the metal will lead to lower premiums in Japan late next year. Producers, which have been suffering from falling LME prices, are charging higher premium to offset the price weakness, according to some traders.

 

Japan's aluminium premiums for January-March shipments were mostly set at $255 per tonne, matching a record high hit in 2012, on strong demand and high overseas rates. 

 

After hitting the peak at around $255 in the first and second quarter, Japan's premiums will soften towards $200, Kondo said.

 

Marubeni expects Japan premiums to be between $200-$255 in 2014, then weaken to $150-$200 in 2015.