Primary Aluminium News - General

Recap 2016: The Year of Focused Sustainability for Primary Aluminium

AL Circle

2016, for the global primary aluminium industry, was the year of price stabilization (rising from the 2015’s lows), surging aluminium exports from China, increasing surveillance by the industry bodies on improper international trade practices, downfall of the once influential U.S. primary aluminium industry and shifting trend towards downstream value-addition. But, of all the challenges that kept cropping up throughout the year, environmental sustainability remained the top priority area for all stakeholders in the primary aluminium ecosystem. From boardroom to laboratory, people were found making concerted efforts to make the aluminium production process less hazardous and more energy efficient so that carbon footprint could be reduced and cost could be optimized.

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Here is a snapshot of the year gone by and the top aluminium news that made an impact on the entire industry value chain:


News
Price, Premium and Market:

Barring a few instances of intermittent slides, this year has seen a gradual increase in aluminium prices both in the London Metal Exchange (LME) and Shanghai markets. Outright prices have provided some respite to many producers of the metal who struggled to cope with the market downturn that started in the second half of 2015 and lasted through 2016 beginning.

As on December 23, the LME CASH Buyer price of aluminium stands at US$1,739 per tonne, aluminium CASH Seller & Settlement price is US$1,740 per tonne, 3M Buyer price is US$1,718 per tonne and 3M Seller price is US$1,718.5 per tonne. The current LME official opening stock of aluminium is estimated at 2139575 tonnes.

News
Premiums for aluminium metal are near all-time lows. And while some market participants are bullish on some areas of the market for next year, no immediate recovery is seen. As on December 22, LME Aluminium US Premium stands at US$175, LME Aluminium West-Europe Premium is US$80, LME Aluminium East-Asia Premium is US$75, and LME Aluminium South-East Asia Premium is US$15.

Mergers & Demergers:

With the primary metal losing its sheen because of the global price declines more and more primary producers chose to move away from integrated operations and focus separately on their upstream and downstream businesses instead, in order to better justify their cost and reap greater benefits out of value-addition. Alcoa Inc, for example, split into upstream Alcoa Corporation and value-added Arconic in November marking the beginning of a new journey for the new world leader with “distinct competitive advantages across the value chain.”

Indian aluminium major Nalco managed to maintain its profitability despite extreme price volatility and kept mulling over its US$2 billion aluminium smelter project in Iran, which, for now remains held up due to market downturn. The company is learnt to be considering selling its alumina (that is exported) to the domestic rival company Vedanta to help it revive its Jharsuguda aluminium plant in Odisha.

The Navaratna PSU has also agreed to support to its regular MSME vendors who ensure quality and timely delivery of products. It has inked a MoU with India Ministry of Mines to meet INR 7,100cr revenue target in FY2017.

News
Investments & Divestments:

1. India’s mining and metal giant Vedanta Resources has planned an investment of INR 150 to 200 billion ($2.93 billion) over next three years to raise the capacity of its Jharsuguda aluminium smelter to 2 million tonnes.

2. A $35 billion-worth minerals and commodities complex called ‘Ras Al Khair’ was inaugurated in the Eastern Province of Saudi Arabia on November 29. This stands out as one of the most ambitious industrial city projects in the Gulf region.

3. Rio Tinto reached an agreement to sell its assets at Lochaber, Scotland to SIMEC for consideration totalling $410 million (£330 million).

4. Noranda obtained court approval to sell its aluminium smelter and facilities in New Madrid, Missouri to ARG International AG

5. Aluminium Bahrain launched Project Titan Phase II

6. Applied Partners offered to buy Century’s Ravenswood aluminium smelter plant and redevelop the property for multiple uses

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Closures:

1. Alcoa shut down Warrick aluminium smelter after 56 years of operation.

2. Tiwai Point aluminium smelter in New Zealand reached a stage from where revival seems almost impossible as of now. The closure will have a far reaching impact on the economy with several fossil fuel power plants making an exit from the country.

R&D Milestones Reached:

1. UC RUSAL launched the first RA-550 pot of new generation running at over 550 kA at the Sayanogorsk aluminium smelter.  The US$28 million project is expected to make the aluminium smelting process at RUSAL significantly energy-efficient.

2. EGA joined hands with the Massachusetts Institute of Technology to work on new technologies that will further improve the Gulf aluminium producer's aluminium smelting processes.

3. A team of engineers at EGA developed a unique cathode structure that could reduce power costs in aluminium production significantly.

4.India’s JNARDDC developed a detoxifying process that destroys 98% of cyanide from the aluminium waste and converts it into carbon that can be used in place of coal. Dealing with hazardous waste, especially destroying cyanide contents from Spent Pot Lining (SPL), was a cause of concern for aluminium industry in the country.

5. Alba upgraded the technology for its Line 6 Expansion Project from EGA DX+ to the EGA DX+ Ultra. The DX+ Ultra Technology will improve energy efficiency, which in turn will allow Alba to increase its aluminium production with no increase in overall energy consumption.

News
Climate & Sustainability: The Top Priorities for Aluminium Fraternity

Call it the after effects of COP 21 Paris summit of 2015, or simply the urge to stay operational and cost-effective over the long run, every player in the primary aluminium sector was found to be paying enhanced attention to issues related to environmentally sustainable aluminium production.

1. The International Aluminium Institute (IAI) and the Aluminium Stewardship Initiative (ASI) signed a MoU to work together in order to promote improved performance for the global aluminium industry, higher production standard, recycling and sustainability.

2. Norsk Hydro and World Wide Fund for Nature (WWF) entered into a one-year cooperation agreement setting a goal to develop innovative solutions that can help cut emissions related to climate change. The one-year agreement says the two shall “stimulate to identify and develop new business opportunities toward a low-carbon society.” Both Hydro and WWF are working to helping Norway meet is climate targets for 2030.

3. The European aluminium industry launched the Sustainability Roadmap to 2025 paving the way for the sector to maximise its contribution to a more sustainable future in Europe.

4. Chinese aluminium smelters came under the gun of the State-run environmental protection bodies as they repeatedly failed to comply with the country's environmental regulations.

Demand-Supply Dynamics:

Aluminium supply has a habit of being price-elastic. Add to it the tighter spreads, off-market metal too returns on-market. Both concerns manifested themselves in 2016: the latest IAI data release showed China’s aluminium production rebounded in November (due to new venture starts and old capacity restarts) and LME stocks saw some large deliveries coming into warehouses. As a result, global aluminium output grew- it was up 3% month-on-month in November at 5,003 thousand tonnes, on higher Chinese output. Nevertheless, given the bullish outlook of aluminium demand, a supply-side deficit is obvious for 2016. This is expected to keep the metal prices buoyed up through 2017.


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