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ALUMINIUM-Major market developments in October

Monday, Nov 28, 2011
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 Aluminium prices may have made some gains during October, but they have since fallen and will remain under pressure in coming months as demand worries persist.

 
 
With as much as half of the industry losing money at current prices producers are likely to respond by curbing output
 
 
"Something has to give and it seems most likely that some form of low price induced production cutbacks will be required to redress the imbalance," RBS said in its latest weekly report.
 
 
The London Metal Exchange (LME) three-months aluminium price was last indicated at $2,003 a tonne.
 
 
"Aluminium's fundamentals are not great, but the price is deep into the cost curve," BNP Paribas analyst Stephen Briggs said.
 
 
Briggs did not rule out the potential for aluminium prices to rise in line with benchmark copper in coming months if concerns about the euro zone crisis and demand prospects subsided.
 
 
But any upwards move would be much more muted than copper's, he added.
 
 
Meanwhile, Fastmarkets analyst Will Adams saw aluminium prices heading lower, taking the view that even if progress is made in tackling euro zone debt, ensuing austerity measures would hurt metal demand.
 
 
"China's looking pretty miserable. They will suffer as Europe suffers so all in all it's not a bright picture."
 
 
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 2011.
 
 
PRODUCTION
 
 
Oct 30 - Bauxite exports from Guinea's CBG have resumed, eight days after a breakdown blocked shipments from the West African state, the company told Reuters. Exports from CBG were suspended due to further damage to the machine used to load boats, company and government officials said. The suspension follows a previous accident on a conveyor belt last month, which froze exports from the world's top supplier of the aluminum ore for ten days. Exports had restarted on Sept. 20 after the earlier incident.
 
 
Oct 24 - China produced 13,266,000 tonnes of primary aluminium in the first nine months of the year, up 10.6 percent from the same period last year, according to the National Bureau of Statistics. Output of alumina rose by 16.5 percent over the same period to 26,281,000 tonnes.
 
 
Oct 21 - Daily average primary aluminium output in China rose to 52,700 tonnes in September from 51,600 tonnes in August, provisional figures from the International Aluminium Institute (IAI) showed. Total primary aluminium production in China fell to 1.581 million tonnes in September from 1.599 million tonnes in August and 1.309 million tonnes in September last year.
 
 
Oct 20 - Daily average primary aluminium output in September rose to 70,700 tonnes compared with a revised 70,400 in August and 66,900 in September 2010, provisional figures from the International Aluminium Institute (IAI) show. Total production in September (30 days) was 2.122 million tonnes, compared with 2.183 million tonnes in August (31 days) and 2.007 million in September 2010.
 
 
Oct 17 - Global miner Rio Tinto signalled a major retreat from its aluminium business, putting an estimated $8 billion worth of assets up for sale across six countries, only four years after buying aluminium giant Alcan for $38 billion. Rio Tinto said it planned to sell 13 assets, including smelters and alumina refineries, in a move immediately interpreted as a way of diverting yet more resources to iron ore.
 
 
Oct 17 - Alcoa, has dropped long-held plans to develop a new smelter in Iceland, saying it had decided it could not get long-term, cheap power for the project. Since 2006, the company had been assessing the feasibility of a smelter in Bakki, North Iceland, which would have been the first in the world using geothermal power, abundant on volcanic Iceland.
 
 
Oct 11 - Russian state bank VEB will sign a deal with China Development Bank (CDB) under which CDB will provide $1.43 billion for building the first stage of UC RUSAL's 750,000-tonne Taishet aluminium smelter, a VEB official said.
 
 
PRICES
 
 
Aluminium prices finished October at $2,218 a tonne, up from $2,157 the previous month.
 
 
Price moves were less marked than in some LME-traded metals, but concerns about the euro zone crisis and negative implications for demand inevitably took their toll.
 
 
Optimism that a resolution would soon be found to the debt crisis proved short lived and three-months aluminium retreated from the month's high of $2,295 reached on Oct. 27.
 
 
Downward pressure has held sway since and on Friday prices dipped below the psychological $2,000 mark to their lowest since late August 2010.
 
 
STOCKS
 
 
Total exchange stocks of aluminium were at 4.661 million tonnes at the end of October, equating to around 38 days of demand.
 
 
Of the end-October total, some 4.548 million tonnes were held in LME-registered warehouses, down only slightly from 4.564 million a month earlier.
 
 
Total visible stocks of aluminium, including latest International Aluminium Institute (IAI) stocks, were around 6.075 million tonnes, down from 6.13 million a month earlier.
 
 
Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka at the end of October rose 1.9 percent, or 4,400 tonnes, during the month to 235,800 tonnes, trading house Marubeni Corp said.
 
 
Inventories at the port in Nagoya, in an area where a number of carmakers have factories, jumped 7,400 tonnes during the month, data showed.

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