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Norsk Hydro decision unlikely to imapct aluminium prices
Edited by : AL CIRCLE
3 min read
A force majeure at the world's largest alumina refinery is unlikely to have a significant impact on aluminum prices, unless production issues persist for an extended period, market participants said Thursday.
Norsk Hydro ASA announced force majeure at its majority-owned Alunorte alumina refinery in Brazil on Wednesday following two separate power outages at the facility. The company said that lower production as a result of the power disruptions could affect its deliveries of alumina. customers.
Alunorte, which is 91% owned by Norsk Hydro, has an annual production capacity of 6.3 million metric tons of alumina. In the first quarter, it produced 1.36 million tons of alumina, but this is likely to be lower in the second quarter because of the power supply problems and remain at an "unsatisfactory" level for the rest of 2013, a spokesman for Norsk Hydro told Dow Jones Newswires.
Alunorte exports most of its production to aluminum smelters worldwide. While the disruption could trigger some short-term spikes in the price of alumina as buyers jostle for available cargoes of the raw material, aluminum prices are unlikely to benefit significantly just yet, said Paul Adkins, the managing director of China-based aluminum analysis firm AZ China Ltd.
"This will only have a significant impact on the aluminum market if the force majeure were to last for a long time," said Mr. Adkins. "This has also come at a good time for the aluminum market, as aluminum production is being reduced in China. The aluminum market is seeing flat production volumes, so there is no great demand growth for alumina at the moment."
Despite output cuts, there is still no shortage of aluminum available to the market.
Global supply of aluminum outstripped demand by 376,500 metric tons in the first three months of this year, according to the World Bureau of Metal Statistics.
"Aluminum supplies are overwhelming," said VTB Capital analyst Andrey Kryuchenkov.
Aluminum prices rose in early London Metal Exchange trade on Wednesday, after news of the Alunorte force majeure. However, gains were short-lived and the metal settled lower. At 1115 GMT Thursday, the LME's three-month aluminum contract was 0.1% lower on the day at 1,861.25 a metric ton.
So far, production issues at Alunorte have not had an impact of Norsk Hydro's own aluminum production, the company spokesman said.
"So far, we don't see that it would, but this is something we need to look into. Clearly, it all depends on what happens at Alunorte in the future," he said.
The refinery supplies Norsk Hydro's primary aluminum smelting capacity in Brazil, Norway and Qatar.
Norsk Hydro ASA announced force majeure at its majority-owned Alunorte alumina refinery in Brazil on Wednesday following two separate power outages at the facility. The company said that lower production as a result of the power disruptions could affect its deliveries of alumina. customers.
Alunorte, which is 91% owned by Norsk Hydro, has an annual production capacity of 6.3 million metric tons of alumina. In the first quarter, it produced 1.36 million tons of alumina, but this is likely to be lower in the second quarter because of the power supply problems and remain at an "unsatisfactory" level for the rest of 2013, a spokesman for Norsk Hydro told Dow Jones Newswires.
Alunorte exports most of its production to aluminum smelters worldwide. While the disruption could trigger some short-term spikes in the price of alumina as buyers jostle for available cargoes of the raw material, aluminum prices are unlikely to benefit significantly just yet, said Paul Adkins, the managing director of China-based aluminum analysis firm AZ China Ltd.
"This will only have a significant impact on the aluminum market if the force majeure were to last for a long time," said Mr. Adkins. "This has also come at a good time for the aluminum market, as aluminum production is being reduced in China. The aluminum market is seeing flat production volumes, so there is no great demand growth for alumina at the moment."
Despite output cuts, there is still no shortage of aluminum available to the market.
Global supply of aluminum outstripped demand by 376,500 metric tons in the first three months of this year, according to the World Bureau of Metal Statistics.
"Aluminum supplies are overwhelming," said VTB Capital analyst Andrey Kryuchenkov.
Aluminum prices rose in early London Metal Exchange trade on Wednesday, after news of the Alunorte force majeure. However, gains were short-lived and the metal settled lower. At 1115 GMT Thursday, the LME's three-month aluminum contract was 0.1% lower on the day at 1,861.25 a metric ton.
So far, production issues at Alunorte have not had an impact of Norsk Hydro's own aluminum production, the company spokesman said.
"So far, we don't see that it would, but this is something we need to look into. Clearly, it all depends on what happens at Alunorte in the future," he said.
The refinery supplies Norsk Hydro's primary aluminum smelting capacity in Brazil, Norway and Qatar.
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