Nonferrous

Not-So-Great Expectations

As long as aluminum scrap dealers and consumers don’t set their sights too high, 2001 should be a fairly decent year. That is one way to summarize the forecast delivered by John Martin of CRU International, London, at the ISRI (Institute of Scrap Recycling Industries Inc.) Aluminum Roundtable.

Presenting his forecast in Chicago at the September meeting, Martin predicted that London Metal Exchange (LME) aluminum prices would enjoy a rising trend in the first quarter of 2001, peaking some time in the second quarter in the neighborhood of $1,750 per metric ton, or 79 cents per pound.

The overall aluminum market is “tighter than some people think,” said Martin, who forecasts world demand growing despite sluggish demand growth prospects for North America.

At the same time, production is being affected by such factors as energy costs and shortages in the Pacific Northwest, creating the potential for a finished aluminum “market deficit of 300,000 to 400,000 metric tons in the first half of 2001,” according to Martin.

He further predicted that “U.S. demand growth and primary production prospects hold the key,” and that if the U.S. economy continues to prosper, aluminum prices could overshoot his targets, while a recession in the United States not only holds back North American demand, but “also affects Asia’s ability to export.”

The key ingot-to-scrap price differential is forecast by Martin to widen, perhaps reaching the nine to 12 cents per pound range in 2001.