Goldman Sachs Warns Rusal Shock May Drive Aluminum to $3,000 – by Swansy Afonso (Bloomberg News – April 18, 2018)

Goldman Sachs Group Inc. says that the extraordinary rally in aluminum unleashed by U.S. sanctions against United Co. Rusal may have way, way further to go, forecasting the metal may spike to $3,000 a metric ton, while raising the possibility of further curbs against Russian coal supplies.

The metal may surge to between $2,800 and $3,000 in the near term as the U.S. moves against the second-largest producer have “dramatically affected” the market, the bank said in a note received Wednesday as it boosted price predictions for three, six and 12 months. The $3,000 target is 25 percent above Tuesday’s close, and almost 50 percent above the price before the curbs.

“U.S. sanctions on Russian oligarchs and the companies that they own or control have dramatically affected the aluminum market,” the bank said. “The uncertainty associated with our forecasts is great. In the event that resolutions are not found quickly enough, prices are likely to exceed our forecasts.”

The global aluminum market has been upended by the U.S. action against Rusal, which has triggered a worldwide supply shock as buyers seek alternative output, while producers also weigh the fallout for alumina, the semi-processed product that’s needed to make the metal.

Aluminum prices have already skyrocketed to six-year highs, and Goldman expects further gains before a reversal that may pull them back down to below current levels.

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