Aluminum Demand Continues To Lead Base Metals Pack—BNP Paribas

Aluminum should continue to outpace other base metals in 2012-13, despite softer demand for the past two quarters, says BNP Paribas. The metal will also be affected by probable slower Chinese growth in 2012-13, not least due to the depressed housing market, the research report says. “Nevertheless, we have shaved our forecast of world aluminum demand growth in 2012 by only 0.5% to about 6.5% and we still expect a rate of at least 8% in 2013, BNP says.

The report says that in any other base metal market, it might have been hard for producers to keep pace with such strong demand growth. “But such has been the rate of growth of global aluminum smelter capacity in the last decade that the industry needed to operate at barely 85% in 2011 in order to balance the market,” BNP says. Required capacity utilization has rarely been above 90% since 2001, hardly a technical challenge for this industry, the report says. World smelter capacity doubled from 2000 to 2011, with China accounting for close to 80% of net growth. The pace did slow sharply in 2010-11 and is expected to remain modest in 2012, BNP says. “Yet, capacity growth looks set to re-accelerate dramatically in 2013, chiefly due to investment in China's western and northern regions,” according to the report. “In short, smelter capacity will still be ample in 2012-13 unless many more plants than to date close shop.”