Goldman Sachs cuts aluminum outlook predicting glut through ¡¯19

Goldman Sachs Group Inc. reduced its aluminum price forecasts by at least 21 percent from 2016 through 2018 because of a global surplus.

The bank cuts its predictions to $1,525 a metric ton in 2016, to $1,625 in 2017 and to $1,700 in 2018 from $1,925, $2,100 and $2,200 as it projected a glut of about 2.5 million tons to 3 million tons from 2016 to 2019.

Prices fell to a six-year low on the London Metal Exchange this month as exports from China surged. While shipments from the country, the world’s biggest producer, fell in July from the highest level this year, they have still increased 28 percent in the first seven months from a year earlier, customs figures showed on Saturday.

A balanced market will be difficult to achieve because most of the easy cuts outside of China have already been made over the past seven years, Chinese producers are often subsidized by the government, costs are deflating and some marginal producers may have hedged at 2014 prices.

Most previous periods of substantial surplus have finished because of a major recovery in global demand or have been protracted, the bank said.

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