Aluminium Price could Reach US$2,700/t, Mitsui & Co.

Mitsui & Co.’s nonferrous metals unit expects aluminium ingot price could reach US$ 2,700 per tonne at 3-month future of London Metal Exchange in 2006 under the strong purchase by fund and speculators. The light metal has cost pressure of higher electricity in Europe and has still power to increase after the relative smaller price increase than copper and zinc in 2005. The unit said the point is how long the speculating money keeps supporting the commodity market. The unit expects some downside scenarios including hard landing caused by housing bubble burst in USA, lunge of oil price and slow down of US economy. The unit also eyes positive stories including more fund money flow to commodity market instead of financial market. Fund money moves to financial market due to interest rate spread but market expectation for no more increase of interest could divert the money to commodity market. The positive factor is apparently supported by technical analysis. LME price increased by 53.8% for copper, by 76.4% for zinc and by 50.6% for lead while the aluminium price increased by only 34% in a year. The Mitsui & Co.’s unit said the aluminium price could increase to US$ 2,700 per tonne if the price would increase as lead. The unit expects LME aluminium 3-month price could be US$ 2,350-2,600 per tonne with US$2,400-2,550 of core range in January-March. The unit said the price would be US$ 2,300-2,700 with US$ 2,350-2,550 of core range in April-June. The unit forecasts the price could be US$ 2,250-2,650 with US$ 2,300-2,500 of core range in July-September. The unit estimates the price would be US$ 2,150-2,600 with US$ 2,200-2,450 of core range in October-December.