Aluminum price to climb to $2,650/mt in up to six months: Novelis

US sheetmaker Novelis expects aluminum prices to climb to $2,650/mt inthe next couple of months as inventories locked in financing deals are unlikely to be released in the near-term future, the company's top executive officer said Monday.

 The aluminum price range should be between $2,400/mt and $2,650/mtin the upcoming months, said Philip Martens, president and chief operating officer of Novelis. "Four to six months -- it could climb up to$2,600-$2,650,"he said.     

"We're going to operate in a slightly positive contango market for the next period of time until such a time when this inventory that's held inreserve starts to come back into the market," Martens said.

 The release of stocks is unlikely to happen next year, according toMartens. "It's really something, an 18- to 24-month process for that to startto happen," he said.

Aluminum for delivery in three months on the London Metal Exchange closedat $2,400/mt Monday. The metal inventories in LME warehouses stood at around4.3 million mt, according to LME's latest figures.   "Overall we've very bullish on the market and we're very bullish on aluminum and the outlook," Martens said.

"On a global basis, we're well in line with everybody else's views that global demand for aluminum is at a 4%-5% compound annual growth rate," he said, noting an 8%-10% demand growth in Brazil, a rebound in European demand and stronger-than-expected consumption in North America.  "Asian demand is moving well above 10% and it's coming in two primary areas for us," Martens said, pointing to strong usage of the metal in electronics products and in beverage can production.

In Europe, the company is seeing current order rates that are equivalent to 2007. "We see Europe as relatively stable now…We think the core of Europe driven by Germany is very solid," he said.

NOVELIS NEUTRAL ON ETFs The company remains "fairly neutral" on the issue of physically backed aluminum exchange-traded funds, Martens said.    "It's a matter of time before the things get organized enough so the ETF system comes up," he said. "Things work OK right now, so from my point of view we're neutral on it, but there is enough momentum and talk about it that eventually it will come into play."  Glencore and Credit Suisse have reportedly been working on an aluminum ETF, with Rusal's head of international sales, Steve Hodgson, hinting in October that the product could be launched within three months. 

 Also, UK-based ETF Securities said earlier this week it is preparing tolaunch a range of physically backed industrial metal exchange-traded commodities, subject to approval from relevant regulators and the London Stock Exchange.

--Agnieszka Troszkiewicz