Dutch aluminum producer bearish on light metal market
Vimetco: Infrastructure spending will impact aluminum in 15 months
By Tom Stundza -- Purchasing, 4/29/2009 3:18:00 PM
It could take as long as 15 months before the world aluminum industry starts to benefit from the numerous stimulus packages designed to kick-start ailing economies, suggests Vimetco, the Netherlands-based international aluminum producer.
Aluminum demand has suffered globally in recent months because of the global economic downturn and, especially, depressed manufacturing in key automotive and aerospace markets.
Demand for aluminum is expected to fall by 2%-3% in 2009, with “no relief” for aluminum prices in the first half, Vimetco says: “A sizeable inventory surplus is expected to grow throughout 2009, with aluminum prices remaining depressed until inventory levels start falling.”
Dow Jones Newswire this week reports that Vimetco has closed 40%, or 395,000 metric tons, of its global aluminum production capacity in the Netherlands, Romania, Switzerland, China, Guinea and Sierra Leone due to weak macroeconomic prices and poor demand. The aluminum spot market is currently down 59% at 63¢/lb since peaking at $1.53 last July.
The Dow Jones story says Vimetco believes 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 says. “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.”
Also see, Aluminum price forecasts down.
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