Reuters reported that the global aluminium market is heading for another supply surplus this year and with demand falling short of expectations prices may fall to reflect this. But the downside potential is limited as such falls would soon lead to cutbacks by high cost producers.
Mr Angus MacMillan independent consultant said that "In the absence of further cuts by producers, the market is on course to record its fourth-consecutive surplus this year and in all likelihood its fifth next year. Demand is not as strong as people thought it was going to be a few months ago.
Mr Stephen Briggs an analyst at BNP Paribas said that prices were bumping into the cost curve at present levels where some smelters would start to lose money and he expected this to help limit declines.
Credit Agricole's Mr Robin Bhar predicted support from similar threats to supply. If prices move lower we'll get shutdowns. He saw potential for prices to edge higher in the final quarter of the year as the global economy and hence metal demand improved. He said that we're going to get growth, even though it's going to be bumpier and rockier than we would have wanted.
Below are some of the more significant recent developments in production and prices that may continue to influence the direction of the market in 2010.
Production
August 24 India rejected a plan by UK based mining group Vedanta Resources Plc to mine bauxite in the eastern state of Orissa over environmental concerns, a blow to the firm already facing hurdles to a planned USD 9.6 billion energy deal in the country. The decision comes after about 4 years of a global campaign against Vedanta's plan to mine in the state that the government says could affect large swathes of forested hills considered sacred by indigenous tribes.
August 20 - Daily average primary aluminium output fell to 66,300 tonnes in July from 66,600 tonnes in June, provisional figures from the International Aluminium Institute showed. Daily average primary aluminium output in China fell to 45,700 tonnes in July from 47,500 tonnes in June.
August 16 - The annual rate of primary US aluminium production rose 8.0% to 1,722,329 tonnes in July from 1,594,096 tonnes in July 2009 and was up 0.2% from June's annual rate of 1,719,625 tonnes. For the year through July, the annual production rate was off 5.6% at 1,714,407 tonnes from an annual production rate of 1,816,286 tonnes for the comparable 2009 period.
August 12 - Norsk Hydro said that it had declared force majeure for aluminium deliveries from its Qatalum smelter in Qatar after a power failure delayed the plant's ramp up schedule. Hydro said that the force majeure would affect its clients mainly based in Asia, the Middle East and to some extent in the United States. Qatalum with a design capacity of 585,000 tonnes of primary aluminium, was running at some 60% of capacity prior to the outage. On September 8 the company said that it would resume production by mid month and aimed to reach full capacity by the end of the Q1 of 2011.
August 11 - According to the National Bureau of Statistics, China produced 9,546,000 tonnes of primary aluminium in the first 7 months of the year up 41.9% from the same period last year. Output of alumina rose by 41.4 percent to 17,067,000 tonnes over the comparable period.
Prices
The aluminium market tended to take its cue from the LME benchmark copper contract in August, reacting either to optimism about global metals demand or fresh worries. But ranges were narrower than in copper. 3 months prices ended the month at USD 2,058 per tonne down from USD 2,175 at the end of July.
On August 4 three months aluminium reached USD 2,249 per tonne, its highest since the end of April. By August 25 it had fallen to USD 1,982.50, but the key psychological support at USD 2,000 emerged intact. In July, the twice yearly Reuters base metals price poll put the median average for the LME cash aluminium price at USD 2,094 per tonne unchanged from the January forecast.
（Sourced from Reuters）
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