Aluminum should continue to outpace other base metals in 2012-13, despite softer demand for the past two quarters, said BNP Paribas, a Paris based global banking group.
According to the commodity research note, the metal will also be affected by probable slower Chinese growth in 2012-13, not least due to the depressed housing market.
“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,” the bank added.
The commodity report also stated 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 continued.
BNP also noted that, required capacity utilization has rarely been above 90% since 2001, hardly a technical challenge for this industry. 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.
“Yet, capacity growth looks set to re-accelerate dramatically in 2013, chiefly due to investment in China's western and northern regions,” BNP Paribas concluded.
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