From the Aluminum Association, a market view for the week ending Friday, July 16, by Paul Williams, CRU Analysis Currently LME three months prices stand below $2000/tonne as concerns over global economic growth continue to weigh on the market. Demand has been relatively robust in 2010 with activity also picking up in USA and Europe. For the first five months of the year, US and Canada mill product shipments rose 9.9%, while in Europe, CRU's contacts report that activity, at least in the bellwether German market, has been firm.
For the year as a whole we expect firm growth in the world outside China, although demand will ease back from Q2 rates, not least because of the summer slowdown.
In the USA, the manufacturing recovery does appear to be losing some momentum, judging by the June IP data, although for the year as a whole primary aluminium demand will show good growth.
In Europe, the euro-debt crisis is casting an ever darkening cloud over the region's prospects, but it is mainly southern Europe where growth is suffering. Elsewhere the much weaker euro is helping growth through exports. China's growth appears to be softening also and our Beijing office has noticed an easing in demand recently.
However, we are less concerned on China's outlook. While GDP growth will decelerate, we do not expect it to sink, especially given the tools available to the government to stimulate the economy. Thus, while Chinese aluminium demand will ease back in the next few months, overall growth prospects remain strong.