Warehouses holding enough aluminum to build 69,000 Boeing 747 jumbo jets are why Peter Sorrentino says the most abundant metallic element in the earth's crust is too expensive. "I don't see why the aluminum price has gotten so high," said Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati. "There's plenty of supply around and demand is still quiet. There's a disconnect between the price and reality." [...] Investors are "chasing commodities" and there is a risk of bubbles emerging, Nouriel Roubini, the New York University professor who predicted the global financial crisis, said Nov. 20 in a speech in Lisbon.
"I don't see why the aluminum price has gotten so high," said Sorrentino, who helps manage $13.8 billion at Huntington Asset Advisors in Cincinnati. "There's plenty of supply around and demand is still quiet. There's a disconnect between the price and reality."
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Investors are "chasing commodities" and there is a risk of bubbles emerging, Nouriel Roubini, the New York University professor who predicted the global financial crisis, said Nov. 20 in a speech in Lisbon.
Think About It (Alda Sigmundsdottir): The high price of aluminium
There is a large faction of people in Iceland who see aluminium smelters as a quick-fix solution to this country's current economic problems. They fail to see that the construction of yet another smelter would be nothing more than a temporary injection into the economy. That sort of injection causes great expansion and overheating, and when the party is over we must deal with the hangover - which inevitably will have people clamoring for yet another smelter. It becomes like a drug, a fix. We saw this happen from 2002-2009, with the construction of a large Alcan smelter in East Iceland that was supposed to save the region from economic depression. A ton of energy was required to power that smelter, so the Icelandic government agreed to build a massive hydroelectric power plant nearby. It was the largest construction project ever in Iceland's history and required the state to take foreign loans in unprecedented amounts - hundreds of billions of Icelandic krónur. The injection of capital into the economy at that time was the beginning of the bubble that six years later played a major part in the implosion of the Icelandic banking system and economy.
We saw this happen from 2002-2009, with the construction of a large Alcan smelter in East Iceland that was supposed to save the region from economic depression. A ton of energy was required to power that smelter, so the Icelandic government agreed to build a massive hydroelectric power plant nearby. It was the largest construction project ever in Iceland's history and required the state to take foreign loans in unprecedented amounts - hundreds of billions of Icelandic krónur. The injection of capital into the economy at that time was the beginning of the bubble that six years later played a major part in the implosion of the Icelandic banking system and economy.
