Though Rusal is likely to make a strong return to the aluminium market next year, premiums in Japan are expected to rise to between US$100 to US$130 per ton late next year due to an expectation of weak global supplies of the metal.
On news of Rusal’s pending release from United States government sanctions, prices at the London Metal Exchange fell to a 16-month low Thursday. However, Japan’s Marubeni said that longer-term forecasts were somewhat rosier.
Marubeni’s general manager of light metals Hideya Kitamura told Reuters that the market had dug in for a longer period of sanctions on the Russian aluminium giant.
“We didn’t expect the U.S. to lift the sanction on Rusal this early, but aluminum market has largely discounted the lifting for some time.
“Aluminum prices are likely to recover next year amid a supply shortage, and premiums are expected to climb above $100 a ton in and after April when demand usually picks up.”
At present Marubeni projects premiums for 2019 will be US$85 per ton in the first quarter, US$90 to US$120 in the second quarter, and US$100 through US$130 in the back half of the year.
“Since the actual costs to bring the metals to Japan, including shipping fees and insurance, are about $90-$95 a ton, we don’t think the premiums would fall from the current levels,” Kitamura explained.
Marubeni forecasts aluminium prices to rise in 2019, averaging between US$2,000 and US$2,100 per metric ton in the opening half of the year, rising to between US$2,100 and US$2,250 in the year’s second half.
The trading house projects a market in deficit for the coming year, short of demand by 1.38 million metric tons, but improving on this year’s projected global aluminium deficit of 1.72 million metric tons. Increased demand by the global automotive market is expected to continue to drive rising demand.