Dec. 3 (Bloomberg) -- Aluminum, the worst performer on the London Metal Exchange in the past year, will outpace peers such as nickel next year, Royal Bank of Scotland Group Plc said.
“Aluminum is one of the most economically geared metals and will benefit from rising demand,” London-based trading analyst David Simmonds wrote yesterday in a report. “For nickel there is a huge overhang of potential production restarts.”
The CHART OF THE DAY shows aluminum prices, in orange, have jumped and nickel prices, in green, slipped after the two traded in tandem through 2009. RBS expects the trend may continue, with Simmonds forecasting aluminum to rise as high as $2,325 a metric ton next year and nickel falling to as low as $13,650 a ton.
Buying aluminum and selling nickel is one of RBS’s “top themes and trades” for commodities in 2010, he wrote. Aluminum will surge as demand for the lightweight metal recovers along with the global economy, while previous gains in the price of nickel, used to make stainless steel, will encourage producers to increase supply as profitability increases, Simmonds wrote.
Aluminum, used to make cars, planes and beverage cans, is the worst performing industrial metal on the LME in the past 12 months, gaining 26 percent, compared with copper’s 101 percent advance and a 73 percent jump in nickel.
(To save a copy of the chart, click here.)
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