London Metal Exchange (LME) aluminium prices are forecast to rise gradually in the latter half of next year possibly to as high as $2,300 a tonne as smelter shutdowns and output cuts squeeze supply, Japanese trading house Marubeni Corp said.
"We expect the LME prices to move higher next year as the market will remain tight," Norinobu Ozawa, general manager at Marubeni's light metals section, told reporters on Wednesday.
Marubeni, a major aluminium trader in Japan, estimated the global aluminium market will see a deficit of 387,000 tonnes in 2015, against an estimated deficit of 125,000 tonnes this year. It sees the deficit to widen to 872,000 tonnes in 2016.
Many aluminium producers have cut loss-making capacity or shut down completely in response to low LME prices, high energy costs and a flood of new capacity from China.
"Given the slack LME prices, high-cost producers will be forced to reduce or end production next year," Ozawa said.
LME aluminium prices, which have gained about 4 percent this year, traded at around $1,875 a tonne on Wednesday.
Marubeni forecast that they would be between $1,900-2,300 in the third and fourth quarters next year, moving up from an expected $1,800-2,200 range in the first quarter.
Global aluminium demand is expected to grow by over 5 percent in 2015 and 2016, led by a solid recovery in the U.S. economy and steady growth in emerging countries, Marubeni said.
The trading firm also forecast that the squeeze on supply would lead to higher premiums in Japan next year, predicting the range between $400-480.
Japan is Asia's top aluminium importer and the premiums it pays set the benchmark for the region. This year, Major Japan Port (MJP) premiums have risen 64 percent to record $420.
Earlier this month, major aluminium producers asked Japanese buyers to pay record premiums of $435-$440 per tonne for January-March deliveries, up as much as 4.8 percent from the previous quarter. But no agreements have been made as buyers demand lower prices.
Global aluminium premiums are expected to reach fresh record highs by mid-2015 on a supply deficit in the United States and Europe, according to a Reuters survey.