Aluminum Prices Show Sharp Rise

Reflecting the trend in the rest of the construction industry, prices for aluminum have gone through the roof in recent months. The upward price trend looks to continue to into 2009, according to a recent forecast from Goldman Sachs. According to an April 7 Reuters report, the brokerage firm increased its aluminum price forecast to $1.31 per pound from $1.12 for 2008 and to $1.33 per pound from $1.21 for 2009.

'Aluminum prices in last 48 months have risen about 35 percent; and in the past 12 months about 6 percent to 8 percent,' says Bob Rushing, pre-contract manager, Architectural Aluminum Techniques in Florida.

The metal's prices on the London Metal Exchange have increased 21 percent since the beginning of the year. The average cash price for aluminum in January was $2,444.64 per ton. In April, the average cash price per ton reached $2,958.36.

Goldman Sachs officials said China's demand for aluminum, expected to increase 20 percent by 2009, continues to drive prices, according to the report.

Other reasons for the price hike are cost of energy and the steady rise in the price of aluminum raw materials, Rushing says.

Penn McClatchey, vice president, Southern Aluminum Finishing Co., Atlanta, agrees that rising energy costs are affecting prices.

'The price of aluminum has risen by about 10 percent during the last year,' McClatchey says. 'The price will follow the price of energy, which aluminum will trend with the price of oil. The price of energy is influenced by many factors, but recently the most acute is that the U.S. dollar has fallen significantly.'

The sharp hike makes industry professionals question how it will affect demand of aluminum.

'It takes awhile to go into effect, but you worry people will see aluminum prices so high and look for other alternatives,' says Mike Petersen, president of Petersen Aluminum, Chicago.

'It's pretty challenging to increase prices into a slowing economy. It takes some creativity,' Petersen says. Though, 'everyone is in the same boat. It's not a big surprise to our customers when we have to raise prices..