New York, January 17 (BNA): Goldman Sachs raised its forecast for aluminum prices, saying that rising demand in Europe and China could lead to supply shortages.
Analysts including Nicholas Snowdon and Aditi Rai said in a note to clients that the metal is likely to average $3,125 a tonne this year in London. This is higher than the current price of $2,595 and compares with the bank’s previous forecast of $2,563, according to Bloomberg.
Goldman sees the metal, used to make everything from beer cans to airplane parts, rising to $3,750 a ton in the next 12 months.
“With visible global stocks at just 1.4 million tons, down 900,000 tons from last year and now the lowest since 2002, a return to the overall deficit will raise scarcity concerns,” the analysts said. “Faced with a much more benign macro environment, as dollar headwinds fade and the Fed hike cycle slows, we expect upward price momentum to build gradually in the spring.”
Aluminum reached record levels shortly after the Russo-Ukrainian war last February. It has since eased as the energy crisis in Europe and the global economic slowdown have caused many smelters to curb production.
Like many Wall Street banks, Goldman is bullish on commodities as a whole, arguing that a lack of investment in recent years has reduced supply reserves. It sees the asset class generating returns for investors of more than 40% this year as China reopens and the global economy rebounds in the second half of the year.
FKN