HSBC: Tightening supply is expected to support aluminum prices.

Howard Lau, a materials analyst at HSBC, said that despite softening Chinese demand and rising inventories putting pressure on near-term price prospects, expectations of tightening supply may continue to support aluminum prices. Companies are becoming more sensitive to price changes, with smaller order sizes and higher frequencies, which will reduce forward purchases and increase overall market inventories. Lau said that structural growth in niche markets such as power grid infrastructure remains relatively insensitive to price changes and continues to support underlying consumption. In mid-morning European trading, three-month aluminum on the London Metal Exchange rose 1.3% to $3,283.50 per ton, but its price is still expected to record a drop of over 4% for the week.