Major aluminum market developments in January

Reuters reported that the sharp increase in London Metal Exchange aluminum stocks in January is a worry and high inventories be a drag on prices in coming months even if the benchmark copper contract continues to scale new heights.

Mr Stephen Briggs analyst of BNP Paribas said that "I can't get excited about aluminum. I think the market will continue to be a laggard. There is no shortage of the metal above the ground and plenty of smelter capacity if the price is right.

LME stocks of aluminum rose by around a quarter of a million tonnes in January and have risen further this month. On Monday they stood at just under 4.6 million tonnes.

Analyst said that a huge amount of metal has come back onto warrant and that's unnerving people a bit, they're worrying that quite a lot more could be coming back on.

Globally production is rising, demand is growing relatively slowly. You have to conclude that stocks will continue to rise. The LME three months aluminum price CMAL3 was last indicated at USD 2,497.75 per tonne.

Below are some of the more significant recent developments in production and prices that may continue to influence the direction of the market in 2011.

Production:

1. January 26 - UC RUSAL had resumed building Boguchany Aluminum Smelter after receiving a loan from the state run lender VEB. RUSAL started building the USD 1.5 billion smelter with a design capacity of 600,000 tonnes of metal per year in partnership with state controlled hydroelectric company RusHydro in 2007. It postponed the smelter project when commodity prices tumbled in 2008. The first stage which will have a capacity of 147,000 tonnes of aluminum per year is 30% complete. Production is expected to start in March 2013.

2. January 26 - China's primary aluminum production rose to 1.246 million tonnes in December from 1.197 million tonnes in November but was down from 1.331 tonnes in December 2009, provisional figures from the International Aluminum Institute. Production in 2010 reached 16.131 million tonnes up from 12.964 million in 2009.

3. January 24 - Guinea, the world's largest supplier of bauxite will double its stake in mining projects to at least a third.

4. January 21 - Rio Tinto terminated force majeure at its Boyne Island aluminum smelter in Australia's Queensland state after flood waters receded.

5. January 20 - According to the National Bureau of Statistics, China produced 15,650,000 tonnes of primary aluminum in 2010 up 19.9% from 2009 levels. Output of alumina rose by 22.4% over the same period to 28,939,000 tonnes.

6. January 20 - Provisional figures from the International Aluminium Institute showed that daily average primary aluminum output in December rose to 68,600 tonnes compared with a revised 68,600 in November and 64,000 in December 2009. Total production in December was 2.128 million tonnes compared with 2.054 million tonnes in November and 1.984 million in December 2009.

7. January 19 - Bosnia's sole aluminum smelter Aluminij Mostar expects to produce a record 128,500 tonnes of primary aluminum this year helped by better demand and a return to full capacity in late 2010. The smelter, located in the southern town of Mostar produced 118,000 tonnes of aluminum last year when it restored full output.

8. January 19 - Azerbaijan plans to restart alumina and aluminum production at its two plants in 2011 amid strong demand forecasts for this year. Det AL Aluminum company which manages an alumina plant in Gyanja and an aluminum plant in Sumgait signed an agreement with Tajik Aluminum Company and Asia's largest trader Noble Resources in December aimed to restart production at the Gyanja facility. Both were at standstill for two years due to money problems.

9. January 14 - The Aluminum Association said that the annual rate of primary US aluminum production rose 7.1% to 1,761,667 tonnes in December from 1,644,549 tonnes in December 2009 and was up 0.2% from November's annual rate of 1,757,560 tonnes. The total output for 2010 was 91 tonnes higher at 1,727,258 tonnes than 2009's total production of 1,727,167 tonnes.

10. January 13 - Norsk Hydro said that technical problems at its new Qatalum smelter in Qatar, 50;50 venture with Qatar Petroleum could delay full output by eight weeks to June 2011. The smelter was producing at 50% capacity.

11. January 12 - Aluminum output in China, the world's top producer, may be trimmed further this month as smelters in southwest Guizhou province face power cuts to offset soaring energy demand linked to freezing weather. Aluminum smelting capacity including capacity that was built but has not been started production was over 21 million tonnes a year at the end of last year.

12. January 11 - Ukraine's only primary aluminum maker ZALK, owned by UC RUSAL, could be sold or stop production because of high electricity costs. A RUSAL spokesman said that the plant privatized in 2000 had faced losses in the past few years due to high power tariffs.

13. January 7 - Alcoa Inc plans to restart three idled aluminum smelters in the United States in the H1 of 2011. The restarted facilities will increase Alcoas aluminum production by 137,000 tonnes over the course of 2011 and by 200,000 tonnes on an annual basis thereafter. Norsk Hydro said that it would not restart the aluminum smelters it has idled citing high inventories and over production.

Prices;

Helped by the strength in the LME benchmark copper contract, aluminum prices have managed to shrug off the fact that LME stocks of the metal are not far off their all time highs.

Three months prices ended January at USD 2,520 per tonne up from USD 2,470 at the end of December. The market rebounded from a decline to USD 2,360 per tonne on January 25 as copper clearly set its sights on scaling new peaks.

（Sourced from Reuters）