Prices, he had to acknowledge, have not kept up because of “too much capacity” among producers.
As they have turned out more of the metal, the latest figures from the International Aluminium Institute show that global production in December hit an all-time record of 45.55m tonnes, on an annualised basis.
Mr Deripaska said: “We had a time when the high prices in aluminium attracted so many players into the industry and that’s why they built a lot of capacity ... they had pressure from the banks to keep this going.”
In response to this excess of supply, he said, Rusal has completed an “investment programme, we restructured a lot of our capacity, we mothballed, we optimised output, we carried out very rational output planning for the next three years.”
Still, he would argue that the activity of financial players in the market masks a tighter supply of the metal. People who want to buy it in physical form have to pay a “ridiculous premium, which we have not seen in 20 years”, he noted.
Certainly, the complaints from users about the queues to get metal out of warehouses – often controlled by the banks active in the market – are legion.
Simply, there is money to be made for some from locking the metal up to collect dust in giant sheds. In a typical arrangement, a bank or commodity trader buys metal, sells it forward at a profit and strikes a warehouse deal to store it cheaply away from the market.
“If you write off the metal tied into different warehouse and financial deals, you will see there is no metal available,” Mr Deripaska said. “We have a very narrow [supply-demand] balance which in two years will turn into a deficit.
“This stock, which seems so high and creates this wrong analysis, is actually not available.
“This year the price will move much more higher than people predict. I don’t want to guess [where], I just try to indicate very clearly ... that the price mechanism is very artificial.”
Meanwhile, the actual consumers of the metal, he said, have become very cautious financially, avoiding hedging – entering into trades to protect their exposure – around their own activities.
“In reality they expose themselves to higher risk. In ’13, ’14, [the price] will be significantly higher,” he said. “This is something that we try to warn our customers: go to a long-term contract, try to define a hedging strategy. Don’t look at the current forward [price] curve which is highly affected by financial players.”
How far is this a fair analysis? After all, you would not expect a metals magnate to talk down his price.
Still, if not all agree with his forecast of a price climb, the rest of what he says is echoed across the market – which analysts at HSBC sum up as having “a moderate surplus, but significant excess capacity and excess inventory”.
Don’t underestimate the impact financial players can have in a commodity market, in other words. ER
With stock markets soaring and risk appetite increasing, Credit Suisse has now turned even more bearish on gold.
On Friday, analysts at the investment bank declared that this year is “the beginning of the end of an era” for gold bugs.
At the start of January, the Swiss broker cut its 2013 price target on the metal by 5pc to $1,740 an ounce. Analyst Tom Kendall declared that “the gold cycle is likely to peak this year” as he predicted a fall starting in the third quarter.
Mr Kendall now believes that gold prices will start falling sooner than he expected just one month ago. “With global growth now improving and inflation expectations contained, we feel that downside risks are building for gold,” Mr Kendall argued. “It looks increasingly likely that the 2011 high will prove to have been the peak for the dollar gold price in this cycle, and that the 'beginning of the end’ of the current golden era comes sooner than the third quarter we forecast in January.”
However, US billionaire investor Paul Singer disagrees. “We envision an environment, perhaps not too far away, in which the need to own something 'real’ will be transcendent in investors’ minds, and the present lack of investor sponsorship of gold will bring forth a sharp rally,” Elliott Management, his $21bn (£13bn) hedge fund said in its fourth quarter report. GW
Oil prices gained last week with the price of Brent crude hitting its highest level since October at around $117 a barrel, “reflecting renewed optimism about economic growth, US dollar weakness and the Fed’s pledge to maintain its asset purchase program,” HSBC commodity analyst Michael Lewis said.
Joe Conlan, an energy analyst at energy consultants Inenco, said that last week’s surprise fall in US GDP is not a worry for oil bulls. “When you look behind the data, especially at the 22pc drop in military spending and the US fiscal cliff, it should not come as a shock or a cause for alarm,” Mr Conlan said. He thinks Brent crude prices could hit $120 a barrel this week. GW
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