Prices however do not seem to be paying much heed to the dispute. Conflicting reports as to the status of the strike have been emerging in the past few weeks. At this stage, it appears that workers at two of the three striking smelters have voted to accept Alcan's offer. Workers at the third smelter have refused the offer, and will remain on strike until further notice. Fundamentally, prospects for aluminum remain constructive.
Prices are unlikely to decline much further however.
Increases in capacity are likely to filter through gradually, through early to mid 1996. This additional metal should be readily absorbed by demand stemming from hearty industrial growth in the emerging Asian market economies, combined with reasonable economic growth in the US and Europe. The inflation news remains decidedly friendly in the United States. But this spike in food prices is likely to be reversed, putting a lid on overall PPI gains in the months ahead. As was the case in 1994, we continue to believe that labor costs will hold the key as to whether the pressures of rising input prices will be passed through to the finished goods and consumer level.