Emirates Global Aluminium expects production to remain stable despite price drop

Despite the drop in the price of aluminium this year, Emirates Global Aluminium (EGA) foresees its production will be stable at 2.4 million tonnes a year for the next three years.

Walid Al Attar, EGA’s chief marketing officer, told Bloomberg News in Dubai that its output last year was 2.3 million tonnes.

Mr Al Attar said the forecast “makes sense” if the London Metal Exchange approves certified warehouses in the Middle East.

The LME has been under the spotlight over the past year amid complaints by users that bottlenecks at warehouses operating under LME rules have inflated premiums for the metal.

EGA, the world’s fourth-largest maker of the metal, is in the process of building a US$3 billion alumina refinery as a boom in regional infrastructure projects spurs demand.

The refinery is expected to be operational by 2017 and will be done in two phases, each with a capacity to produce 2 million tonnes of alumina.

While aluminium is best known in its guise as fizzy drink cans, it is also being increasingly used by car makers, who are favouring the metal in aspects of production over steel because of its lightness, which boosts vehicle fuel efficiency.

Ford, one of the biggest car makers in the US, said earlier this year that it would make body panels for its ubiquitous F-150 pickup with aluminium.

The price of aluminium traded in London has declined 4.7 per cent this year amid an increase of production from China.

China, which accounts for more than half the world’s output, will add more than 80 per cent of new global capacity this year, according to data this month from Alcoa, the biggest producer of the metal in the US.

“While the aluminium market in world ex-China remains in deficit, we remain cautious until Chinese product shipments subside,” metal analysts at Bank of America Merrill Lynch wrote in a report this week. “Aluminium prices and premia have fallen in recent weeks highlighting that last year’s bull market has gradually subsided.”