The record glut in aluminum will be no bar to rising prices because of delays in getting metal from warehouses, even as Barclays Plc advises investors to sell and Morgan Stanley says it has the worst outlook of any commodity.
Stockpiles will expand for at least the next four quarters, reaching a record 8.67 million metric tons by the end of 2013, or enough to make about 62 million cars, Barclays estimates. Production will exceed demand by the most since 2009 as output expands from China to Saudi Arabia, the bank says. Futures will rise as much as 16 percent to $2,400 a ton next year, the median of 29 analyst estimates compiled by Bloomberg.
The gains are forecast as the metal is not always available. Buyers are waiting about a year to get metal from warehouses in Detroit and the Dutch port of Vlissingen, which hold the most inventories. As much as 80 percent of stockpiles tracked by the London Metal Exchange are locked into financing deals and unavailable to consumers, Credit Suisse Group AG estimates. That means some customers are paying record premiums to get supply, according to Platts, a unit of McGraw-Hill Cos.
“You have what I would call an artificial tightness in the market and that’s created by financing,” said Jeremy Baker, who manages about $850 million of assets at the Vontobel Belvista Commodity Fund in Zurich. “If you look at it from a purely fundamental aspect it is probably one of the metals that is the least attractive, primarily due to excessive supply.”
Aluminum rose 2.7 percent to $2,075 on the LME this year. Prices will average $2,225 in the final three months of 2013, or 10 percent more than this quarter, the median of 19 estimates shows. The Standard & Poor’s GSCI gauge of 24 commodities fell 1.1 percent and the MSCI All-Country World Index of equities gained 13 percent. Treasuries returned 1.98 percent, a Bank of America Corp. index shows.
Inventories tracked by the LME rose 5.3 percent to 5.23 million tons this year, reaching a record Dec. 21, bourse data show. Premiums paid for immediate supply in the U.S. Midwest rose 45 percent this year, while in Europe they increased about 80 percent, Platts data show. Buyers have to wait as long as 64 weeks to get metal from warehouses in Detroit and 57 weeks in Vlissingen, according to data compiled by Bloomberg. The wait times at the locations lengthened as total bookings jumped the most in more than 10 months to 1.95 million tons, the highest on record, LME data on Dec. 24 showed.