The global aluminum market was in a 1.9 million metric tons a year surplus by the end of 2011, Norwegian producer Norsk Hydro ASA (NHY.OS) said Thursday, with demand affected by weak markets in the latter part of the year.
Consumption in the fourth quarter on an annualized basis amounted to 24.7 million tons, while global supply increased in the fourth quarter to take annualized production to 26.6 million tons, it said.
Norsk Hydro, Europe's largest aluminum producer, said recent announcements concerning smelter closures and limited new capacity coming on stream is expected to improve the supply-demand balance in 2012.
"We estimate a demand growth of about 3%-5% in 2012 in the world outside China," the company said. "However, market sentiment continues to be influenced by significant economic uncertainty."
Weak aluminum prices as a result of the ongoing economic problems have resulted in further cost-cutting programs across aluminum smelters worldwide, including recently at Norsk Hydro's Kurri Kurri smelter in Australia, an operation plagued by high energy prices and hit by the appreciation of the Australian dollar against the U.S. dollar.
Norsk Hydro said that in China, annualized consumption amounted to 19.3 million tons in the fourth quarter, a decline compared to the third quarter and the historically high levels in the second quarter. "The primary aluminum market in China is believed to have been largely balanced for 2011 and is expected to remain so in 2012," it added.
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