ALUMINIUM-Major market developments in March

LONDON, April 14 - Global aluminium demand is rising, but so too is production and the market is heading for another big supply surplus this year, with prices likely to fall to reflect this at some point, some analysts say.

But others take the view that aluminium's fundamentals are sufficiently strong to prevent such a move.

"Demand is rising, but there's no huge turnaround. Unless there is producer discipline the market will be in a 2.0-2.5 million tonne surplus this year,” said independent consultant Angus MacMillan.

"There will be a reckoning, although when is a matter of conjecture,” he added.

In the short term, MacMillan said prices might test technical support at $2,300 a tonne, with $2,000 a target if the next support at $2,200/2,150 was breached.

At 1305 GMT the London Metal Exchange three-months aluminium price （CMAL3> was indicated at $2,445/55 a tonne.

RBS analyst Daniel Major expected any near-term downside move in the market in line with other metals to be limited, in part because of the strength of the rebound in demand.

RBS predicts aluminium consumption will increase by over 12.0 percent this year, while it expects demand for LME benchmark copper to rise by a more modest 7.0 percent.

Harry Colvin, commodities economist at consultancy Longview Economics, expected the market to remain well supplied, but thought there was upside potential for prices longer term, with a weaker U.S. dollar and emerging market demand having a big part to play as time wore on.

Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in 2010.

PRODUCTION:

March 31 - The West Indies Alumina Co., whose majority shareholder is UC RUSAL <0486.HK> <RUAL.PA>, laid off its remaining workers and said it would close its two refineries in Jamaica, labour leaders said. The company, known as Windalco, has a production capacity of 1.2 million tonnes of alumina annually. It halted bauxite mining and suspended operations at its Kirkvine and Ewarton refineries a year ago due to a worldwide downturn in demand for aluminium. Windalco said at the time the suspension would last at least a year, and cut its workforce of 1,119 to 762, keeping the latter group on the payroll with reduced hours and wages. [ID:nN31214082] On April 1, UC RUSAL said it had not abandoned plans to restart the two refineries. [ID:nLDE63004E]

March 31 - Google Inc <GOOG.O> has said it identified cyber attacks aimed at silencing opposition to a Vietnamese government-led bauxite mining project involving a major Chinese firm, and said they were similar to those at the heart of the company's friction with Beijing. The computer security firm McAfee Inc <MFE.N>, which detected the malware, went a step further, saying its creators “may have some allegiance to the government of the Socialist Republic of Vietnam”. The Vietnamese Foreign Ministry had no immediate comment. [ID:nSGE62U09U]

March 30 - Aluminum Corp of China Ltd <2600.HK><601600.SS> said it plans to phase out high-cost and outdated alumina and aluminium capacity in three years to help lift the company to profitability. The company said it would close more than 200,000 tonnes of aluminium smelting capacity and 1 million tonnes of alumina capacity. It said the closures were part of an ongoing restructuring programme to cut costs and were unlikely to affect production of primary aluminium and alumina used to make the metal, as it also planned to build new low-cost capacity. [ID:nTOE62T09R]

March 23 - Guinea's annual output of bauxite fell by 16.4 percent in 2009 versus 2008, according to a government document seen by Reuters. The West African country, which depends on mineral exports for much of its foreign currency income, also produced 15.8 percent less alumina in 2009 than it did in 2008, figures from the finance ministry document showed. Total production of bauxite was 14,774,200 tonnes in 2009, and total production of alumina was 500,400 tonnes. [ID:nLDE62M1OO]

March 22 - Daily average primary aluminium output rose to 65,200 tonnes in February from a revised 64,300 tonnes in January, provisional figures from the International Aluminium Institute showed. Daily average primary aluminium output in China rose to 46,500 tonnes in February from a revised 43,600 tonnes in January. [ID:nLDE62L0XB]

March 18 - The annual rate of primary U.S. aluminium production fell 12.8 percent to 1,697,850 tonnes in February from 1,947,158 tonnes in February 2009, but gained 1.8 percent from January's annual rate of 1,668,262 tonnes, the Aluminum Association said. For the first two months, the annual production rate slid 20.5 percent to 1,682,304 tonnes from a 2009 year-to-date annual production rate of 2,155,825 tonnes. [ID:nN18634739]

March 16 - A drought-driven power shortage in southwestern Yunnan is reducing lead production in China's fourth largest producing province, and also hampering aluminium output, industry sources said. Yunnan, where hydropower stations account for nearly 70 percent of electricity capacity, has struggled to generate enough power since late last year because of the worst drought conditions in more than half a century, and is preparing to cut power supplies to a growing number of energy-intensive and high-polluting firms. [ID:nTOE62F03H]

March 16 - Aluminium production in the Middle East is expected to exceed 3 million tonnes per year by the end of 2010, the chairman of the newly formed Gulf Aluminium Council said. Current production in the region was pegged at about 2 million tpy which made up about 5-6 percent of the global production capacity, he said. [ID:nLDE62F17N]

March 16 - State-owned Emirate's Aluminium is currently producing 300 tonnes a day, and expects to hit its production target of 700,000 tonnes per year for phase one by December, its project director. The $5.7 billion project located at Al Taweelha in Abu Dhabi, is a joint venture between Dubai Aluminium Company Limited and Mubadala Development Company , Abu Dhabi's investment vehicle. Emal is expected to be the world's largest single-site aluminium smelter complex with this project. [ID:nLDE62F0ZL]