Commodity Online
Aluminium output growth's twin drivers
Edited by : AL CIRCLE
2 min read
Global aluminium production grew by 7.4 percent to 43.4 million tonnes in 2011, according to figures released by the International Aluminium Institute (IAI). The twin drivers of that growth were China and the Gulf, where production grew by 10.3 percent and 27.5 percent, respectively.
Last year's growth dynamic is key to understanding this year's market dynamic, based as it is on producers' collective response to prices that are cutting into the global cost curve.
Analysts at Barclays Capital wrote last week that based on an average price of $2,090 per tonne so far in January, "close to 45 percent of smelters globally have seen their margins turn negative".
The list of producer cutbacks is lengthening. Norway's Norsk Hydro said earlier this week it would shut one potline with annual production of 60,000 tonnes at its Kurri Kurri smelter in Australia. The rest of the plant is under what bond markets would call "negative watch".
All the other voluntary cutbacks so far announced have come in Western Europe. True, Rio Tinto has cut output at both its Alma and Shawinigan smelters in Canada, but these are not exactly voluntary curtailments, reflecting rather a union lock-out and power problems respectively. What, though, of last year's twin drivers of global production growth?
Last year's growth dynamic is key to understanding this year's market dynamic, based as it is on producers' collective response to prices that are cutting into the global cost curve.
Analysts at Barclays Capital wrote last week that based on an average price of $2,090 per tonne so far in January, "close to 45 percent of smelters globally have seen their margins turn negative".
The list of producer cutbacks is lengthening. Norway's Norsk Hydro said earlier this week it would shut one potline with annual production of 60,000 tonnes at its Kurri Kurri smelter in Australia. The rest of the plant is under what bond markets would call "negative watch".
All the other voluntary cutbacks so far announced have come in Western Europe. True, Rio Tinto has cut output at both its Alma and Shawinigan smelters in Canada, but these are not exactly voluntary curtailments, reflecting rather a union lock-out and power problems respectively. What, though, of last year's twin drivers of global production growth?
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