Rollercoaster ride of ’08 has Al sights on long run

Dec 31, 2008 | 10:00 AM | Tom Jennemann

To say that 2008 was a year of changed expectations for the aluminum market would be putting it mildly.

Aluminum producers, traders and industry executives started 2008 full of optimism, but the year exited with a whimper after a rollercoaster ride sent prices to record highs in June, followed by a spectacular crash due to massive oversupply and a global economic recession.

Of course, it wasn't just aluminum market participants who failed to foresee the coming market crash. But when Alcoa Inc., Pittsburgh, predicted a 10-percent aluminum consumption growth rate in 2008—and it's then chairman and chief executive officer, Alain Belda, spoke of demand continuing to absorb the growth in output—it was doing no more than expressing the market consensus.

"While the U.S. economy will muddle through 2008 and Europe will have modest growth, this is not where business is going to be played this year. Global macro trends continue to support and drive aluminum consumption, absorbing the considerable supply growth we have seen in the past two years," Belda said (AMM, Jan. 11).

Others were more direct. In describing the expected shift in aluminum pricing from rangebound trading to ever-high prices, James Gutman, executive director and senior economist at Goldman, Sachs & Co. in London, put it this way "in like a bear, out like a bull. We've seen the worst of the downturn in U.S. demand," he said (AMM, Jan. 23).....