Aluminum Seen Above $3,000/Ton On Rising Demand, Econ Optimism

DJ Aluminum Seen Above $3,000/Ton On Rising Demand, Econ Optimism By Matt Whittaker Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)–Aluminum prices have bottomed and could be headed above $3,000 a metric ton by the middle of next year as market optimism increases, physical and speculative demand continues rising and scrap supply remains tight, an analyst said Wednesday. “As confidence has been restored, aluminum has trended toward equilibrium levels,” Jorge Vazquez, aluminum analyst with Harbor Intelligence, said via a webcast. “We have the typical start of a bull market.” The aluminum market has been tightening since January and experienced a deficit in June as confidence on the global financial system returned and aluminum demand is growing on a monthly basis despite remaining down from last year’s levels. In the U.S. housing and auto markets, a reversion toward equilibrium implies future aluminum demand to replace that lost to destocking. “There is a lot of demand coming,” Vazquez said. Meanwhile, scrap is tight. “I’m hearing stories of not being able to secure enough scrap,” Vazquez said. In June, aluminum prices completed a typical technical-chart bottoming process and are now in a bullish mode, he said. Prices broke above their 200-day moving average, in keeping with what appears to be a longer term bull market, Vazquez said. Aluminum has broken above the $2,000 resistance mark. It may pause and make a small correction to the $1,800 area in the near term, but the ingredients are right for aluminum to rise to $2,600 and then $3,000-$3,400 by May, 2010, he said. “If there’s a time to be bullish it’s right now,” he said. -By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com (END) Dow Jones Newswires 08-05-09 1144ET Copyright (c) 2009 Dow Jones & Company, Inc. DJ info: N/DJCS,N/DJME,N/DJOS,N/OSCM,N/OSME,N/OSTR,N/ALI,N/CMD,N/DJS,N/DJSS,N/DJWI,N/FCT ,N/MET FSN44615 CMT GENERAL METALS 2009-08-05 15:44:14 UTC ^^^^^^