According to the latest figures from the International Aluminum Institute, global aluminum output dropped a gear to 115,500 tonnes per day in March from 116,200 tonnes in February.
Expressed in annualized terms, the MoM decline was equivalent to 265,300 tonnes denting the explosive 2.73 million tonne increase recorded in the first two months of the year. Two divergent trends are at work here and they are likely to remain in place for the foreseeable future.
The first trend is one of rising output in the world outside of China. Annualized production was running at 25.48 million tonnes in March and is nearing the peak output levels seen in 2008 prior to the Great Contraction. Only one region, Latin America, has seen production drop over the last year, reflecting smelter closures in Brazil, most recently the small Aratu plant. The driver of higher output remains the Gulf region where output in March 2011 was running over 30% higher than in March last year.
That's down to the simultaneous commissioning of two new smelters, the 585,000 tonne per year Qatalum plant in Qatar and the 700,000 tonne per year EMAL plant in Abu Dhabi. Elsewhere, particularly in Europe and North America, it is a story of restarts as producers turn on the taps again in response to recovering demand. More is to come in the US where the full impact of Alcoa's 200,000 tonnes per year of restarts will only be fully evident in the Q2.
The second trend is one of volatile production in China. This is not in itself a new development. The country is the world's largest producer of the light metal but also the one with the largest ratio of high cost smelters. It has accordingly assumed the role of global swing producer. Chinese producers were the first to react to the collapse in prices in late 2008 and equally the first to ramp back up in early 2009.
National production plunged late last year in response to the government's drive to meet power efficiency targets ahead of the December expiry of the old 5 year plan. Run rates soared again in the first two months of this year as the pressure from Beijing abated. But expect run rates to become even more volatile over the coming period as the smelter sector responds to both short term and medium-term drivers emanating from the power sector.
Power is the defining cost input for aluminium production. Power is also a highly problematic issue in China. The National Reform and Development Commission has already warned that China could be facing the worst summer power shortages in recent years. Indeed, a growing number of provinces, Hubei being the latest, have warned that they may start rationing power as early as this month in response to low water levels in hydro systems and tight coal supplies.
豫公网安备41010502003434号