Alumina Limited which owns a 40% non-operating stake in Alcoa World Alumina Chemicals’, is aiming higher at this moment with the increasing demand for alumina and the rising aluminium prices despite the supply disruption.
Russian metal industry giant, Rusal is being trampled under the European sanctions and Australian bans moreover, the closing of its only Ukrainian Refinery Nikolaev is hammering hard on the Company. Plus, Covid issues, production delays and Chinese environmental measures have together contributed to the rise of aluminium prices as explained by Alumina CEO Mike Ferraro.
“The alumina market price reached over $530 per tonne in March 2022 and averaged $498 per tonne for that month. The API currently sits at $371 per tonne, still well above the average price of $329 per tonne in 2021,” remarked Ferraro.
The distributions from AWAC to the ASX-listed Alumina were US$115.5 million in Q1 taking its total for the year to be US$141.2 million to date, with stable expectations through the month of May.
Though Ferraro agreed that supply demands might have caused fluctuations in the pricing system over the past years but a medium-term outlook could support a supply-demand imbalance in the years to come.
“The medium-term outlook for the alumina market is strong. Over the next five years, the expected and potential increase in primary aluminium production is 5.9 million tonnes per annum outside China due to industrial growth and a decarbonizing world.”
“This would require around 11 million tonnes per annum of extra alumina. Only 3 million tonnes per annum of additional alumina production is currently committed outside China in the next few years”, he added.
Ferraro’s wit tells him that China will take a long time to bring on new capacity outside the Middle Kingdom since it only exports at high prices. This primaeval practice can eventually lead to regional supply deficits.
“The global energy transition and growth in aluminium metal consumption driven by de-carbonization are positive for the alumina industry.”
These fundamental positives for the medium term reinforce the value of already established alumina assets which have long term energy, with ready access to bauxite, such as AWAC”, he concluded.
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