Aluminium has fallen behind in the base metals rally of the past few years; this year, prices have slid by about 10% as inventories have risen. But the metal, used in drinks cans, cars and aircraft, should regain its lustre. Supply looks set to tighten as high energy costs production is far more energy-intensive than for other base metals lead to plant closures, as commodities guru Jim Rogers recently pointed out. Demand from China, the world's largest producer, is on the rise as consumers buy "increasing numbers of just about everything from drinks cans to cars", says Eoin Treacy on Fullermoney. Chinese vehicle sales leapt by 23% in the first half of 2007. Xiao Yaqing of the Aluminum Corp. of China reckons Chinese aluminium demand will grow by 33% this year, while global consumption will rise by 10%.
Strong Chinese demand, along with the removal of tax rebates on aluminium exports suggests the country is on course to become a net aluminium importer in the next few years. This is likely to be the case by 2009, says Wang Feihong of Beijing Antaike Information Development Co. "There will be a strong boost to global aluminum prices". In the medium term, then, the outlook for aluminium is "appealing", says Treacy. There is a London-listed aluminium exchange traded fund (ALUM).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Review: Eden Roc Cap Cana – fun, sun and golf in the CaribbeanTravel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course
-
Reeves delays cash ISA reform, but savers are not out of the woods yetThe chancellor has reportedly delayed plans to cut the cash ISA limit, which were set to be announced at Mansion House on 15 July, and will take more time to consult with the industry
