Marubeni expects narrower aluminium surplus in 2010

TOKYO, Dec 4 - The global surplus in primary aluminium is expected to ease in 2010 as demand for the metal gradually returns with economic recovery and outpaces a growth in supplies, Marubeni Corp <8002.T> said on Friday. Supply and demand will become about balanced by 2011, Yutaka Ishibashi, general manager at Marubeni's light metals section, said at an annual presentation on the company's outlook on aluminium. The surplus in primary aluminium is expected to amount to 1.19 million tonnes in 2010, narrowing from this year's surplus, estimated at about 2.57 million tonnes. "There will be few new smelting projects that will be launched in the west, while China will just go ahead with current projects," he said. While aluminium production in China is expected to rise in 2010 compared with 2009, output is expected to fall in Europe and North America due to narrower profit margins. "We think that high costs will force some smelters, particularly those in North America and Europe to close (next year)," Ishibashi said. Some 1.3 million tonnes of production capability could be removed in 2010, he said. He said that growth in demand for the metal used in transport and packaging will accelerate in 2011 as the global economy strengthens which will increase demand for aluminium. Ishibashi said demand for primary aluminium would tighten in 2011 as there were no plans for the start of new large-scale smelting projects in the west while the government was restricting new projects in China. He said aluminium prices on the London Metal Exchange was likely to rise as supply and demand becomes more balanced. The median LME aluminium price was likely to be $1,900 per tonne in the first quarter of next year, then rise to $2,000 in the second quarter, he said. Key three-month LME aluminium rose to $2,166 per tonne on Thursday, its highest since late October 2008. Following are details of Marubeni's forecast for primary aluminium supply and demand in 2010 and 2011, with a comparison against estimates for this year . Western world in the table means countries in free-market economies. Eastern world includes China, Eastern Europe and the CIS. Year 2008 2009 2010 2011 Total demand 38,862 34,904 37,574 40,914 Total supply 40,119 37,470 38,764 40,926 Balance +1,257 +2,566 +1,190 +12 Following are regional breakdown of primary aluminium supply : Year 2008 2009 2010 2011 Western world North America 5,703 4,730 3,900 3,920 of which USA 2,638 1,724 954 974 West Europe 4,841 3,900 3,218 3,216 South America 2,664 2,518 2,435 2,384 Asia 1,560 1,780 2,129 2,435 Oceania 2,291 2,215 2,252 2,083 Middle East 2,164 2,522 3,281 4,027 Africa 1,680 1,675 1,553 1,571 Eastern world East Europe 481 409 268 188 CIS 4,872 4,343 4,219 4,162 China 13,865 13,377 15,508 16,939 Following are regional breakdown of primary aluminium demand : Year 2008 2009 2010 2011 Western world North America 6,293 4,907 5,398 5,932 of which USA 5,472 4,267 4,693 5,153 West Europe 7,161 5,491 5,903 6,257 Japan 2,279 1,797 1,932 2,049 South America 1,346 1,221 1,272 1,376 Asia 3,929 3,691 3,813 4,270 Oceania 427 369 386 407 Middle East 1,242 1,168 1,194 1,304 Africa 454 471 486 534 Eastern world East Europe 1,045 686 753 811 CIS 1,147 891 1,002 1,073 China 13,540 14,213 15,435 16,901 ((miho.yoshikawa@thomsonreuters.com; +81-3 6441 1854; Reuters Messaging: miho.yoshikawa.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))