Aluminum prices rose in February but while unrest in the Middle East and north Africa may help to underpin them near term on supply disruption fears output will outpace demand and peg them back further ahead.
The Middle East has become an increasingly important aluminum supply source one of the few outside top producer China.
Aluminum smelting is also very power intensive. High oil prices pushaluminum will outperform other metals near term but medium term the ramp up in supply will be too much for the market.
Price declines would simply be limited by the fact that aluminum prices had not risen as far as other industrial metals in the first place. He said that the bigger concern is the wider growth implications of high oil prices rather than anything specific to the Middle East.
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;
February 28 - Norsk Hydro said that productivity at its Qatar JV Qatalum smelter plant has exceeded previous estimates. Now that the problem with faulty water pumps has been resolved the company expects to achieve production as planned in June.
February 23 - National Aluminum Company Limited will fall about 100,000 tonnes short of its production target of 1.68 million tonnes of alumina in the fiscal year to March due to delays in refinery expansion.
February 21 - Provisional figures from the International Aluminum Institute showed that daily average primary aluminum output rose to 68,600 tonnes in January from a revised 68,500 tonnes in December. Total production in January was 2.216 million tonnes compared with a revised 2.122 million tonnes in December.
February 17 - Aluminum Bahrain ALBH.BH was operating at full capacity, despite pro democracy protests in the Gulf island kingdom.
Februry 16 - Railway workers in Bosnia's Serb region called off a strike that had disrupted shipments of raw materials to major industries across Bosnia for the second time in two months.
The strike has hurt industries such as alumina plant Birac, construction firm Sirbegovic, iron ore miner ArcelorMittal Prijedor and steelmaker ArcelorMittal Zenica both affiliates of top world steelmaker ArcelorMittal.
February 14 - Russia's United Company RUSAL O486.HK sees steady output growth in 2011 driven by strong demand from China and a rebound in North America. Expected higher output at RUSAL's Siberian smelters and the planned restart of the Windalco Kirkvine Works Plant from July would help lift production this year.
February 10 - The Aluminum Association said that the annual rate of primary US aluminum production rose 7.0% to 1,784,850 tonnes in January from 1,668,262 tonnes in January 2010 and was up 1.3% from December's annual rate of 1,761,667 tonnes.
Prices;
Aluminum prices finished February at USD 2,600 per tonne up from USD 2,520 a month earlier. Fears of spreading unrest in the Middle East and North Africa and the potential negative implications of higher oil prices for global economic growth weighed on the industrial metals complex as a whole.
The month's low of USD 2,470 was recorded on February 11. At times though healthier economic prospects offset concerns about developments in the Middle East and North Africa. On March 3, 3 months aluminum reached USD 2,628 its highest since mid September 2008 helped by better than expected US labour data. Prices pulled back from there and while risk appetite crept back in for a time investor concerns resurfaced.
On Friday, prices retreated in line with LME benchmark copper after a major earthquake hit Japan, unsettling global financial markets. Chinese inflation data also fuelled concerns over metal demand. According to the latest Reuters poll in January, aluminum cash prices CMAL0 are expected to average USD 2,484 per tonne in 2011 compared with USD 2,173 last year.
(Sourced from Reuters)
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