Home > News > Others

Aluminium production reaches new high

Thursday, May 08, 2014

Global aluminium production reached a new high in March despite cuts to capacity by the biggest manufacturers.

Companies such as Alcoa, Rusal and Rio Tinto have been shutting smelters over the past two years in an effort to tackle oversupply, as depressed prices continue to weigh on the industry. But surging output in China has more than offset these cuts.
Production of the lightweight metal rose to 4.329m tonnes last month, a 5 per cent year-on-year increase, according to the International Aluminium Institute. The previous monthly high, of 4.255m tonnes, was achieved in October.
While output decreased over the past 12 months in Europe and the Americas, production rose by nearly a fifth in the Middle East, where smelter owners benefit from cheap energy. But the biggest increase occurred in China, where aluminium production rose from 1.734m tonnes in March 2013 to a record 1.984m tonnes last month. China now accounts for 46 per cent of global aluminium output, compared with 21 per cent a decade ago.
The country has not been immune to the pressures of low prices. Aluminium for three-month delivery on the London Metal Exchange traded on Wednesday at $1,877 a tonne, the same price achieved in 2005, near the start of the commodities boom, and at times during the 1980s and 1990s. As part of the Chinese government’s plan to reduce inefficiencies and tackle pollution, some high-cost smelters have been shut. Wood Mackenzie, the consultancy, reckons that 2m tonnes of capacity has been trimmed since 2012.
But at the same time, large smelters have opened in northwest China, taking advantage of the cheap coal deposits nearby.
“So much new capacity has come online in China that the closures there don’t mean much,” said David Wilson, director of metals research at Citigroup.
Citi reckons that worldwide production of aluminium, which is one of the most widely consumed base metals and is used in the transportation, beverage can and construction industries, will increase by 4.9 per cent in 2014, to 52.7m tonnes. Demand is expected to grow by an even greater amount, about 6 per cent, helping to bring the market closer to balance. The World Bureau of Metal Statistics said on Wednesday that the market had slipped into deficit in January and February.
Mr Wilson expects a small surplus this year, of about 162,000 tonnes. That is substantially lower than the annual surplus of between 1m and 2m tonnes from 2009 to 2012, after the financial crisis. Much of this excess production ended up locked away in warehouses as part of financing deals. Stocks held in registered warehouses and by producers are estimated at more than 7.2m tonnes, or 56 days’ demand. A similar amount may be held at other locations, Mr Wilson said.
“We will need a 1m tonne-a-year deficit for at least a decade or more to get rid of the overhang of metal,” he said.

Recommended exhibitions

2014 Shanghai International Metal Packaging and Can Making I
Venue: Shanghai World Expo Exhibition & Convention Center Organizer: China Metal Packaging Association Shanghai Packagi......
Japan Metal Stamping Technology Exhibition 2014
The exhibition suggests a total solution for designing, manufacturing and production focus on introduction examples, me......
International Green Building Expo-China 2013
Venue: Poly World Trade Expo Center Sponsors Guangdong Building Energy Conservation Association Guangzhou Association o......
Canadian International Aluminium Conference
Palais des congrès de Montréal, Canada
The Aluminium Association of Canada
Conference pr......