Aluminum is down . . . but don’t count it out

Jun 01, 2008 | 09:02 AM |

If the boom in commodity prices has been a home run for most metal producers, it's fair to say aluminum is stuck kicking dust on second base.

Certainly, the commodities bull market has been good for aluminum at around $3,000 a tonne, prices are more than double what they were five years ago. But the increase is far less than that recorded by other base metals, and with domestic demand suffering due to the economic slowdown, the chances of a big spike in prices seem to be limited.

At the same time, a game-winning play has yet to be made on the merger-and-acquisition front. After Rio Tinto pushed Alcoa aside to snatch up Canada's Alcan Inc. in 2006, there's been relatively little action. BHP Billiton's audacious bid for Rio continues to rumble on, but has faded from the headlines as Rio's shareholders dig in for a protracted battle.

While the aluminum markets may not sport the star power of an Alex Rodriguez or a Manny Ramirez, there's still plenty of strength behind the scenes. In addition to the market pressures and increasing de-alignment of the U.S. and global markets identified in our cover story (page 28), both of North America's traditional aluminum superpowers are facing interesting times.....