Alcan maintains view that mkt will be in 200,000t surplus this year…

Canadian producer Alcan said it is maintaining its view that the global aluminium market will record a modest production-consumption surplus of 200,000t in 2007. That compares with a market deficit of 162,000t last year. The company is projecting an 11.2% increase in supply to 37.7 million tonnes on the back of greenfield projects, expansions and continued strong Chinese production growth. Demand is projected to grow by 10.1% to 37.5 million, again largely reflecting super-strong growth in China, which is expected to account for 75% of demand growth this year. Inventories of unwrought metal, expressed as weeks of shipments, are expected to remain about five weeks of supply through 2007, “which is still very low by historical standards,” the company said. Alcan made the point that in China the gap between production capacity and actual production has closed significantly in recent months. Apparent consumption, meanwhile is also tracking steadily higher towards production capacity, which “signals that China at some point in the near future may need to increase its imports of aluminium units,” according to Alcan chief executive Dick Evans. He also drew attention to the relative out-performance of far-forward aluminium prices. “In our view this reflects the longer-term outlook for higher energy costs and increasingly high cost structure of smelters in China,” Evans said.