Aluminum prices jump to 16-month high

|By:, SA News Editor

Aluminum prices reach their highest levels in 16 months as falling inventories, smelter closures and a strong demand outlook continue to attract buyers.

Companies such as Alcoa (NYSE:AA), Rusal and Rio Tinto (NYSE:RIO) have been shutting smelters over the past two years in an effort to tackle aluminum oversupply, while demand has remained strong; Citi sees demand growth of 6%/year through the end of the decade, driven by the increased use of aluminum in car production.

Sentiment also has been helped by declining inventories, as LME stocks have dropped below 5M metric tons for the first time since Sept. 2012, but analysts say it will take years to whittle away at the further 5M tons of inventories thought to be held in non-LME warehouses.