Primary Aluminium Demand to Rise by 6.1% in 2007, Sumitomo Corp.

World primary aluminium demand will increase by 6.1% to 36.183 million tonnes in 2007, according to estimate by Sumitomo Corporation. The supply will turn into 315,000 tonnes of oversupply when the supply will increase by 7.1% to 36.198 million tonnes. Sumitomo Corp. expects the 3-month price at London Metal Exchange will decrease to the level at US$ 2,100-2,900 per tonne toward the year end. The firm expects the demand is flat for Japan and keeps firm for Western Europe in 2007 compared with 2006 while the demand decreases slightly in USA. The firm expects Chinese demand exceeds 10 million tonnes for the first time in the history despite of the lower growth rate. The firm expects the supply will increases in North America without electricity trouble in 2007 from 2006. The supply keeps increasing in Asia and Middle East. Chinese supply increases by double digit to 10 million tonnes despite of slower investment control by the government. The firm expects the LME price keeps the high level at US$ 2,400-2,900 per tonne for the first half year while the price decreases in the second half due to higher supply. The firm expects the premium price depends on how much China reduces the export though the US premium could decrease in second half due to the backwardation market. The firm, however, warns if LME inventory would decrease significantly, the premium could rebound.