America’s largest producer of aluminium – Alcoa - sees global demand for aluminium rising 7% this year which signals a potential price rise as previously overstocked Chinese aluminium inventories begin to dwindle.

The rise in demand has been attributed to aerospace and commercial transportation sectors combined with cuts to production which are already in place. These factors come together to reduce a supply glut which has seen aluminium prices driven down by 13% in 2013.

On Monday Alcoa confirmed its demand forecast despite its taking a net loss in the second quarter of the year – a loss incurred by restructuring costs brought on by plant closures. The company expects to see a 9-10% increase in demand for aluminium from the aerospace industry, supported by healthy demand from construction, automotive and commercial transport.

Despite this encouraging news, and the news that Chinese stocks of aluminium are falling, the stockpiles in London Metal Exchange (LME) registered facilities has risen to a record high of more than 5.45 million tonnes at the end of June. This will mean that even despite industry-wide production cuts, prices are not likely to move any time soon.

Although Alcoa is the US’ largest producer of the metal their results are no longer regarded as indicative of economic growth, however the quarterly results will still be analysed closely.

Post By Marc