According to trading house Sumitomo Corporation, the global aluminum market will swing into a deficit this year for the first time since 2006 as cuts in output deepen and demand from automakers grows.

Mr Shingi Yamagiwa Sumitomo’s manager of light metals trading said that “Global consumption will outpace supply by 61,000 tonnes in 2014, flipping from a surplus of 580,000 tonnes last year. The deficit will widen to 493,000 tons in 2015.

Sumitomo, which owns stakes in smelters from Malaysia and Australia to Brazil, joins Goldman Sachs Group Inc in predicting demand will overtake supply this year.

Goldman Sachs said recently that the world will face a 579,000 tonne shortfall after seven years of oversupply and low prices resulted in the closing or curtailment of 50 smelters.

Mr Yamagiwa said that “We’ve brought forward our deficit forecast to this year following more cutbacks amid strong demand, especially from North America.”

Sumitomo reversed its January projection, when it saw a surplus of 312,000 tons this year. Prices collapsed 36% from a peak in 2011 until the end of 2013, forcing producers to shut smelters to trim supplies. That process accelerated in January after Indonesia banned the export of unprocessed ores including bauxite, a raw material used to make aluminum.

The metal entered a bull market last month and prices are up 14% this year, the second most among the six main industrial metals traded on the London Metal Exchange.

Alcoa Inc the largest US aluminum producer, last month shut its facility in Point Henry, Australia and said that it will curb capacity at two smelters in Brazil, where producers are reducing output to the lowest in 12 years. Oslo based Norsk Hydro ASA said in May it would permanently close its Kurri Kurri plant in Australia.

(Source - www.steelguru.com)