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Aluminium – Major mkt development in Oct/2010 as prices-demand sink / inventories rise

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This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 10 years, 7 months ago.

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  • #2462

    basil parmesan
    Participant

    ALUMINIUM-Major market developments in October

    LONDON, Reuters Wed Nov 16, 2010 – Global aluminium prices will head lower in the final part of the year as demand continues to fall short of supply and inventories rise, some analysts say.
    But others expect supply and demand to be fairly well-matched and prices to hold steady.
    “The fundamentals are still poor, stocks are extremely high and rising. Prices could fall to $2,200 by the end of the year,” said independent consultant Angus MacMillan.
    “There’s plenty of excess capacity and plenty of stocks,” said Carl Firman, analyst at Virtual Metals.
    London Metal Exchange inventories of aluminium jumped by 47,000 tonnes on Tuesday — the biggest one-day rise since mid-August. For an interactive graphic on monthly stocks and prices:  http://r.reuters.com/caw34q
    But demand was reasonably strong, particularly outside the United States and Europe, according to industry consultant James King. He expected the market to be more or less balanced next year after a 1.4 million tonne surplus this year and predicted prices would average $2,400 a tonne in 2011.
    The LME three-months aluminium price was last indicated at $2,344 a tonne.
    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:
    Oct 28 – Getting enough power to produce aluminium next year is key to meeting an expected sharp gain in demand, smelter firms said at an industry conference in China’s Henan province, top output hub for the metal. Smelter executives said a drive by Beijing to cut energy use and emissions has caused many firms in China to consider new investments to focus on energy efficiency and possible mergers to cope with a policy expected to continue into the coming years.
    Oct 27 – China’s primary aluminium production may rise by 2 million tonnes, or 11.4 percent on the year, to 19.5 million next year, according to Antaike. In 2010, production would rise 28.4 percent, or by 3.87 million tonnes to 17.5 million, versus a previous forecast of 17 million, despite production cuts at smelters in Chinese regions such as Henan, Guizhou and Guangxi, on power supply cuts.
    Oct 26 – China will produce 16.0 million tonnes of primary aluminium this year, an official from the Ministry of Industry said on Tuesday, a cut from a previous forecast of 17.0 million tonnes.
    Oct 26 – China will produce 95 percent of the alumina needed domestically next year thanks to expanded capacity, from 88 percent this year, an analyst at state-backed research group Antaike said. China is the world’s top consumer and producer of primary aluminium and imports some alumina for the production of the metal. But next year the country might need less imported alumina if Chinese refiners such as Chalco gear up new capacity as expected.
    Oct 26 – Montenegro and Russia’s EN+ signed an agreement giving the government a controlling minority stake in the Kombinat Aluminijuma Podgorica aluminium plant that is a key driver for the country’s economy. KAP has been running losses since global metals prices fell and last year the government agreed to provide guarantees for a 135 million euro loan to repay loans and pay for redundancies. In return, EN+ which in 2005 bought a 58-percent stake for 48.5 million euros, said it would transfer half of its shares to Montenegro’s government.
    Oct 24 – Alcoa Inc said it started construction of a $10.8 billion integrated smelter and rolling mill complex in Saudi Arabia. The project is a joint venture with Maaden. First output is set for early 2013 when it will produce 740,000 tonnes per year of primary metal. The second phase of the joint venture will include a bauxite mine with an initial capacity of 4 million metric tons per year and an alumina refinery with an initial capacity of 1.8 million metric tons per year.
    Oct 22 – India threw out plans by London-listed miner Vedanta Resources’ to expand its alumina refinery over green worries. Vedanta operates a 1 million tonne-a-year alumina refinery in eastern Orissa state and wants to expand its capacity sixfold.
    Oct 22 – Daily average aluminium production in China fell to 43,600 tonnes in September from 44,800 tonnes in August, provisional figures from the International Aluminium Institute showed.
    Oct 21 – A tentative labour agreement was reached at Century Aluminum’s Hawesville aluminium smelter in Kentucky. A ratification vote was scheduled for Oct. 28.  But on Oct. 29 it was reported that the proposal had not been ratified.
    Oct 20 – Daily average primary aluminium output rose to 66,700 tonnes in September from 66,500 tonnes in August, provisional figures from the International Aluminium Institute showed.
    Oct 12 – Vimetco said its 265,000 tpy primary aluminium smelter in Romania is operating at a reduced rate and is expected to produce 206,000 tonnes in 2010. The company said the plant has an electricity contract until 2018, which related to a continued production volume of 206,000 tonnes.
    Oct 8 – Alcoa said it expects both its Aviles smelter in Spain and its alumina refinery in Sao Luis, Brazil to be running at full capacity by the end of the year. In June, the entire area surrounding the smelter in Aviles, Spain flooded, forcing the facility to shut down. Significant repair work allowed the smelter to begin operating in August. Alcoa said the Alumar alumina refinery in Brazil operated at an annual run rate of 2.9 million tonnes by quarter end and remains on track to achieve full production run rates of roughly 3.5 million tonnes by the end of 2010.
    PRICES
    Aluminium prices ended October barely changed at $2,344 a tonne from $2,351 the previous month. Helped by a weak dollar, three-months prices trended generally higher in line with the rest of the base metals complex in the first half of the month. They reached $2,459 a tonne on Oct. 14, their highest since mid-April.
    But after pulling back from there price moves in aluminium were more subdued than some of the others through to the end of the month.
    However, the market was dragged up in November as benchmark copper reached a new record high on strong Chinese economic data. Aluminium rose to $2,500 a tonne on Nov. 11, its highest since August 2008. But prices have since fallen back on worries top metals user China plans further steps to cool down its overheated economy.
    In July, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash aluminium price at $2,094 a tonne, unchanged from the January forecast.
    STOCKS
    Total exchange stocks were at 4.796 million tonnes at the end of October, equating to around 45-1/2 days of demand. Of the end-October total, some 4.306 million tonnes were held in LME warehouses, down from 4.352 million tonnes a month earlier. Total visible stocks, including latest International Aluminium Institute unwrought stocks were 6.088 million tonnes, down from 6.166 million tonnes a month earlier.
    Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka totalled 230,400 tonnes at the end of September, down slightly from 236,100 tonnes a month earlier as imports declined, according to Marubeni Corp. The official said demand remained weak.
    Stocks held at the three ports at the end of last month were estimated at 225,800 tonnes, down 4,600 tonnes from September.
    (3000 Xtra users can access Reuters Metal Production Database by clicking on http://bond.views.session.rservices.com/mpd/)

  • #5400

    Charles Randall
    Participant

    Here is Global overview on Aluminum market developments by reuters that indicate trends for prices-demand to sink and inventories will rise. 
     
    Gives backdrop/reason for recent talk about Alcoa looking to push for lower petcoke prices and Rio Tinto/Alcan promoting some new price indexing towards Iron ore next year/2011. The lag / bad timing metals markets often try push into petcoke markets but seldom work and often create an environment that just increases natural refining shift away from anode quality petcoke production and into more fuel coke. Consolidation & Economic shutdowns are about to shove this into critical mass in the next coker addition cycle.
     
    Alcoa has been dragging around its ~2001 Inert Anode development as strategic club to used against calcined petcoke prices for the last 10 years but has yet to convert any existing plant (its Massena & Pittsburg test lines don’t count as commercial applications) or put it in any new grassroots plant. Hasn’t been bad example of bluffing/bad faith positioning like this since the Houston Crown Refinery used threaten starting up scrap calciner during price negotiations for over 10 years until plant was sold & scrap physically removed!
     
    And others like Rio take advantage of effect on price without any commercial ready backup plan (Alcoa never played well with others and is unlikely do so on this research breakthrough).  Meanwhile global refining industry has now lost more than 18 coker’s that used produce green anode coke as part of calcining base supply. China and the MidEast are new areas where big losses supply will occur due either domestic smelting capacity increases or new world scale coking refineries become fuel petcoke…..or both.
     
    Continuing to pursue a confrontational philosophy with your major raw materials supplier instead of integrating into that market is plan for disaster (Rio & BHP above all others should know this) that is becoming irreversable. The really sad thing is they went thru the EXACT same process/philosophy with Aluminum pitch producers who used to sell coal pitch as byproduct for $90/ton until they stopped making it due environmental push and the industry eventually had pay over $400-600/ton for stand alone plants to make it as on-purpose product (now includes some Petroleum Pitch producers like MAP).
     
    Stupid is continuing to do the same thing that leads to bad outcome but expecting different outcome….
    Regards

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