Brazil’s aluminium production falls in July

Brazil’s aluminium output fell 8% year-on-year in July as lower metal prices and high energy costs discouraged new investments in primary production.

The country’s primary aluminium output stood at 110,800 tonnes in July, compared with 120,400 tonnes in the same month last year, according to Brazil’s aluminium association Abal.

In the January-July period, total production of the light metal was 776,800 tonnes, down 8.4% compared with the same period in 2012.

“Domestic production is down while demand is possibly growing. We expect the government to reduce import duties soon,” a Brazilian aluminium executive told Metal Bulletin.

Brazil currently imposes a 6% duty on aluminium imports.

“Increasing imports of primary aluminium are likely to be necessary in the next two years," Tadeu Nardocci, Novelis’ South America president, said recently.

Earlier, Alcoa had announced it will temporarily curtail 124,000 tpy of capacity at its smelters in Brazil in response to low aluminium prices and premiums.

“The Alcoa announcement really increased the worries for the sector,” another aluminium executive in Brazil said.

Brazil’s per capita aluminium consumption is 7.4 kg, below USA’s estimated 25.9 kg and Mexico’s 8.8 kg, according to Abal’s 2012 statistical yearbook.

“Distances in Brazil are not easy to manage and there are lots of costs [...] given the current economic scenario, I would expect [local] demand to grow,” Thomas Bradtke, partner and managing director at BCG’s Dubai office, said.