Major aluminum market developments in November

Reuters reported that the global aluminium market will be in supply surplus again next year as demand growth will slow from this year while production continues to rise.

Mr Marco Georgiou of industry consultants CRU Group said that "We see reasonable global demand growth next year but slowing from this year while supply will rise with restarts at small independent smelters and new production in the Middle East. The market will be in surplus next year with prices volatile at times but probably capped on the upside at USD 2,500 with reasonable support on the downside at USD 2,100 as that's where the marginal cost of production is."

Analysts expected production cutbacks in top producer China, made as part of local governments' efforts to help Beijing meet energy saving targets by the year end to be reversed in early 2011.

Mr Angus MacMillan independent consultant said that the best we can hope for is that the Chinese market will be in rough balance next year but that means the rest of the world will be in surplus.

Another analyst said that while aluminium stocks in London Metal Exchange warehouses had been falling throughout much of this year, they showed no signs of a downtrend strong enough to trigger a turnaround in sentiment.

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 the remainder of 2010 and into 2011.

Production:

1. November 29 - Rio Tinto Alcan plans to spend USD 3.5 billion to build an aluminium plant in Paraguay that will produce an estimated 670,000 tonnes per year raising the company's initial projections. The unit of global Rio Tinto initially announced USD 2.5 billion investment in December 2009 that would have produced some 480,000 tonnes of aluminum a year. Construction of the plant is set to start in 2014 and be completed within two and a half years.

2. November 24 - Ghana plans to restart its Valco aluminium smelter next year as a prelude to building an integrated aluminium industry as world metal prices and its own energy resources improve. The 200,000 tonne per year smelter with 6 potlines has been shut since March 2007, largely due to weak metal prices and power shortages caused by low water levels in the vast Volta hydropower dam.

3. November 24 - Independent US aluminium producer Ormet said that it plans to restart the two idled potlines at its Hannibal, Ohio smelter. The restart preparations were due to start immediately with the process expected to be completed in the Q1 of 2011 returning the plant to full production capacity.

4. November 22 - Daily average primary aluminium output rose to 67,300 tonnes in October from 66,700 tonnes in September, provisional figures from the International Aluminium Institute showed. Daily average of primary aluminium output in China rose to 41,600 tonnes in October from 43,600 tonnes in September.

5. November 11 - According to the National Bureau of Statistics, China produced 13,189,000 tonnes of primary aluminium in the first 10 months of the year up 27.6% from the same period last year. Output of alumina rose by 28.1 percent over the same period to reach 24,162,000 tonnes.

6. November 11 - An Alcoa executive said that China will likely curtail another 600,000 tonnes of aluminum smelter production before the end of 2010 to meet energy efficiency targets but whether they restart that shuttered production in 2011 remains to be seen. Alcoa estimated about 700,000 tonnes of capacity had already been shut.

7. November 10 - Alcoa expects its Sao Luis alumina refinery in Brazil to reach full capacity by the end of the year. In September, the company said that the plant had been affected by power and commissioning problems.

8. November 10 - Rio Tinto Alcan will invest USD 10 million in the expansion of the bauxite residue containment site at its Vaudreuil alumina refinery in Quebec of Canada.

9. November 9 - Abu Dhabi based Emirates Aluminium expects to complete a capacity expansion plan that will help its current output triple to 700,000 tonnes by the end of this year. The company produces more than 200,000 tonnes from its phase one Greenfield smelter. An expansion to 1.4 million tonne per year is expected to be completed in 2013 to 2014.

Prices;

Aluminium prices ended November at USD 2,275 per tonne down from USD 2,344 the previous month. On November 11, the market reached its highest since August 2008 dragged higher under the influence of LME benchmark copper and boosted by strong Chinese economic data. But the market fell later on worries top metals user China planned further steps to cool its overheated economy.

By November 17, three months had fallen to USD 2,185 and the ensuing recovery was fairly muted. The fact that copper reached new record highs lent support to prices in early December though, as did a strike at one of BHP Billiton's South African aluminium smelters.

（Sourced from Reuters）