ALUMINIUM-Major market developments in November

 

 

"A lot of the industry is under pressure because of these low prices, so there's going to be a lot of support if prices fall further, there's not that much downside," said Standard Chartered analyst Daniel Smith.

 

 

The London Metal Exchange (LME) three-months aluminum price was last indicated at $2,005 a tonne.

 

 

Fastmarkets analyst Will Adams mooted a target of $1,800 a tonne, given the subdued demand picture.

 

 

At that level a concerted supply response should be seen.

 

 

"We're well below Chinese costs and pretty much below western European costs of production, so I think the downside is limited for aluminium," said Harry Colvin of Longview Economics.

 

 

On Monday, Dutch aluminium producer ZALCO said it was looking for a buyer to restart its smelter which was shut last Friday due to a lack of funds after the company filed for bankruptcy.

 

 

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 and into 2012.

 

 

PRODUCTION

 

 

Nov 21 - Daily average primary aluminium output in October rose to 70,900 tonnes compared with a revised 70,700 in September and 67,700 in October 2010, provisional figures from the International Aluminium Institute (IAI) show.

 

 

Nov 21 - Daily average primary aluminium output in China fell to 48,100 tonnes in October, down from 52,700 tonnes in September, the provisional IAI figures showed.

 

 

Nov 14 - Ten to 15 percent of world primary aluminium capacity will be shut down or mothballed if global prices remain at current levels into the first half of 2012, UC RUSAL's first deputy CEO said.

 

 

Nov 10 - China produced 14,677,000 tonnes of primary aluminium in the first 10 months of the year, up 9.5 percent from the same period last year, according to the National Bureau of Statistics. Output of alumina rose by 16.2 percent over the same period to reach 28,932,000 tonnes.

 

 

Nov 9 - Argentina's Aluar said it will not meet its expected output of 475,000 tonnes of aluminium this year as recent heavy rains flooded its smelter. The plant was expected to be fully operational in 90 days.

 

 

Nov 7 - Alcoa Inc said it would spend $2.1 billion over five years to cut costs and raise output at three smelters in Quebec as part of its efforts to upgrade its operations. Alcoa's Baie-Cameau, Deschambault and Becancour smelters would get new 25-year power supply contracts in the Canadian province, the company said, which will help it to hike its production capacity by 120,000 metric tons per year and reduce its costs by 13 percentage points at those plants.

 

 

Nov 2 - Alcoa has temporarily stopped producing certain ingots at its Becancour smelter in Quebec because of a quality problem, the company said. A spokesman said the company suspended production of its P1020 aluminum billet in late October as a result of high iron content and was talking with customers to mitigate the impact.

 

 

Nov 2 - Guinea's alumina production rose 25.5 percent year-on-year in the first eight months of 2011 while output of bauxite was up 3.5 percent over the same period, according to a government report. Guinea, the world's top exporter of bauxite which usually ships about 13 million tonnes a year, produced 11.2 million tonnes of the aluminium ore between January and August, according to the report.

 

 

PRICES

 

 

Aluminium prices finished November at $2,110 a tonne, down from $2,218 the previous month.

 

 

The market trended generally lower during the month on persistent worries about the euro zone crisis and its implications for economic growth and demand for industrial metals.

 

 

The month's low of $1,975.50, and aluminium's lowest since July 2010, was reached on the last day of the month, although the market staged a bounce above $2,100, spurred on by news of a coordinated move by major central banks to provide liquidity to the financial system.

 

 

But the market failed to build on this move and by Dec. 14 had fallen to $1,955.75, a new lowest level since July 2010. The psychological $2,000 a tonne level has since tended to keep a lid on prices.

 

 

STOCKS

 

 

Total exchange stocks of aluminium were at 4.738 million tonnes at the end of November, equating to almost 39 days of demand.

 

 

Of the end-November total, some 4.558 million tonnes were held in LME-registered warehouses, up slightly from 4.548 million a month earlier.

 

 

Heavy inflows took LME stocks to a record high of 4.826 million tonnes on Dec. 13. Further rises were anticipated and indeed materialised as consumers, nervous about the global economic outlook, held off buying metal.

 

 

On Wednesday inventories reached a fresh peak of 4.954 million tonnes, just short of the psychological 5.0 million tonne level.

 

 

Total visible stocks of aluminium, including latest IAI stocks, were around 6.144 million, up from 6.075 million a month earlier.

 

 

Estimated aluminium stocks at key ports in Japan totalled 221,500 tonnes at the end of November, down 6 percent from the month before, trading house Marubeni Corp said. End-October inventories totalled 235,800 tonnes.