Aluminum prices are down 15% from last year with a shrinking market that is already in oversupply. As bad as that sounds, the aluminum market’s looming problems could change for the worse in February when new rules governing the London Metal Exchange (LME) are expected to force the disclosure of “hidden” inventories around the world.
The new LME rules are designed to improve competitiveness in the market and has aluminum smelters reviewing their options, especially those with higher cost operations, as a worldwide “super” oversupply looms. The demand side is no better and depressed consumption driven by the automotive industry further darkens how deep into the price curve the February rule changes could cut.
Market experts suggest that with a demand rebound unlikely, supply cuts in excess of one million tons a year will be needed to prevent aluminum prices from falling over an ominous edge.
We will continue to keep you updated on market conditions through our website news section, so check back often. Metro Alloys has successfully served its clients for more than 30 years in all market conditions and we encourage you to contact your sales representative, Marvin Fish, Gary Kamp or Abby Frank with any questions.