In its quarterly commodities comment on Tuesday, Deutsche Bank summarised global aluminium demand as disappointing despite current prices offering good value so far in 2013.
The bank said, ‘Only the US seems to be performing well in terms of growth and this is far from sufficient to meaningfully improve aluminium balances.’
It appears that disappointing demand from China and similarly developing markets has exacerbated continued weakness in Europe, however the London Metal Exchange (LME) is currently trading at $1,900/mt which Deutsche Bank describes as ‘approaching good value’.
It has been noted that significant quantities of aluminium are still being stored in warehouse finance deals, and this factor of the market has some way to go before financing becomes unappealing. The LMT warehouse stock itself was at 5,203,150 mt on Tuesday.
Unfortunately the bank does not appear optimistic for demand as 2013 continues, and it predicts no significant impact from seasonal factors, such as an increase in construction activity throughout the summer months:
…this ‘window’ of seasonal buying is quickly closing; in fact we expect that by May there will be little change of seasonally driven strength and the likely catalyst for demand surprise will come, once again, from government policy…’