The head of aluminum for Rio Tinto Group (LON:RIO) is making a bold prediction: prices for the metal are heading for an “extremely” volatile crossroads.
According to a recent report from Bloomberg, Alfredo Barrios cites uncertainty with the timing of China curbing production, which will further serve to keep investors on the edge of their seats. Barrios told Bloomberg in an interview at their Toronto office,
That’s really where the uncertainty is at the moment...There’s no doubt that if you look at the supply side, if you look at the environmental issues, sooner or later that will change. But when is a question mark.
China continues its fight against pollution by ordering to reduce steel and aluminum output in more than two dozen northern cities.
Aluminum Price Impacted by Overcapacity, High Inventory
Barrios added that overcapacity and high inventory could impact aluminum price increases in the near future. He told the news source,
There’s a number of factors which will dampen any price increase if it goes too far...If you look at what are the fundamental reasons behind why prices are where they are, and how different they are from a year ago, it’s sometimes very difficult to see what has made aluminum be higher at all. What’s changed so radically in the last year?