Much will depend on government spending in areas such as infrastructure and the electrical grid, which would ordinarily be expected to ramp up at about this time of year, he said.
Because of the spreads on the LME, the picture is bearish in terms of financing capability in the aluminium market, Hodgson said – but not for long.
As long as the backwardations on the LME remain tight, premiums will fall, as their movements in recent weeks have been “almost entirely related to the spreads”.
In turn, the falling premiums mean financing deals involving aluminium become less attractive, and the absence of financing for excess metal means it will end up returning to the open market, he said.
But this is not a particular concern, according to Hodgson.
“It will sort itself out. The backwardations [on the London Metal Exchange] will reverse when sufficient warrants are delivered to unwind that tightness,” he said.
“I think overall,...