Update on major aluminum output cuts in 2008

Reuters reported that aluminum market has been beset by supply problems for much of the year with tight power supplies and high energy costs a major factor. But their impact has dissipated recently as demand worries have come to the fore. Below are detailed some of the main disruptions or potential disruptions to production so far this year China Chalco said that it may have to cut output because of weak prices, signaling that other producers there might also struggle to keep their high cost capacity running and follow suit. In July 2008, it was reported that Chinese top 20 aluminum smelters, which account for over seven tenths of output, were cutting production by up to 10% as they struggle with power shortages and rising costs. Based on May's output of 1.16 million tonnes, the move would cut around 83,000 tonnes a month from China's total aluminum output. Earlier in the week some smelters in Shanxi had been forced to curb operations due to electricity rationing. China had already lost aluminum output this year after severe winter weather and subsequent power shortages in January, followed by a major earthquake in Sichuan province in May. The quake destroyed 20,000 tonnes per year of old capacity at A-Ba Aluminum's smelter and delayed indefinitely the start-up of a new 100,000 tonnes per year facility scheduled to come on stream around end May. Guangyuan Qimingzing Aluminum said the quake destroyed about 5% of its 110,000 tonnes per year capacity in Sichuan. South Africa In March 2008, BHP Billiton said that it would almost halve operations at its Bayside smelter in South Africa to curb power demand and help the country recover from an electricity crisis. Its Hillside smelter in South Africa and Mozal plant in Mozambique would operate on 90% of their power needs. The total annual output loss was put at just over 120,000 tonnes. In October 2008, it said that power shortages in South Africa had caused an 8.2% decline in total production at the three smelters. India In June 2008, National Aluminum Co Limited said that it may cut production if coal shortages continue. It had not received coal due to a truckers' strike, forcing it to shut down one of the seven power units that feed its Angul smelter. As of June 20th 2008, output was unaffected. Brazil In June 2008, Brazil's Aluminum Association said that the country's primary aluminum output fell 1.3% in May to 139,900 tonnes. The fall was attributed to the temporary shutdown of one of two production lines at Novelis's Ouro Preto smelter due to high spot energy prices on the local market in early 2008. United States On June 19th 2008, Alcoa Inc said that it will temporarily idle half the production at its Rockdale, Texas smelter because of local power supply problems. About 120,000 tonnes of production were shut due to electricity supply disruptions and local market energy costs. On September 30th 2008, Alcoa said that it will stop making aluminum at the plant because of power supply issues. It said production might resume if it secured reliable power supplies. New Zealand In May 2008, Rio Tinto said that it will cut aluminum output by about 10% indefinitely at its 350,000 tonnes per year Tiwai Point smelter. The cutback began on May 2nd 2008 with a 5% reduction but intensified around mid month. In October 2008, it said that it had restarted idled production at the plant after power supplies improved. Tajikistan In February 2008, Tajik Aluminum Company faced more pressure to cut aluminum output after Turkmenistan halved electric power supplies to the nation. It had only seen a 10% cut in supplies, but some analysts expressed concern that a prolonged shortage could lead to more cuts and affect its output. Production has since recovered and in January to May 2008 period was up by 0.2% YoY at 168,720 tonnes. Great Britain In June 2008, a localized fire led to a loss of power at the Anglesey smelter in Wales and the plant operated at reduced capacity. In early July 2008, 51% owner Rio Tinto said that full production might not be restored until September 2008. Source: www.steelguru.com