Aluminium to return above $3,000 over the next six months – ING

The aluminium industry’s ability to swiftly respond to strong demand and higher prices is being hampered by the ongoing energy crisis and the move to decarbonisation. The risk to prices is more skewed to the upside, particularly in any further supply squeeze, according to Wenyu Yao,  Senior Commodities Strategist at ING.

Aluminium sees a perfect storm in the energy crisis

“Given the nature of primary aluminium production, we remained structurally bullish on aluminium. However, due to the recent escalating power issues, we have lifted our aluminium forecast to $2,950/t for 4Q21 (based on LME 3M quarterly average). Still, we expect prices to return above $3,000/t over the next six months.”

“Key downside risks include any major reversal in the current decarbonisation push and policies in the traditional fossil fuel mining sector – such as a big boost in coal supply that could alleviate the power issue and demand destruction.”