MI ANALYSIS: Non-China aluminium production slowly accelerating

Aluminium production growth outside of China is slowly accelerating thanks to a combination of smelter restarts and new capacity.

The latest figures from the International Aluminium Institute (IAI) show daily average production rising to a fresh monthly record of 67,200t per day in April from 67,000t in March.

Cumulative production over the first four months of this year was 8.022 million tonnes, representing year-on-year growth of 2.6%. That growth rate has steadily picked up pace since the start of January from last year’s muted 1.7%.

North American production rose by 2.9% in the Jan-Apr period and daily average production in April of 15,400t was the highest level recorded by the IAI since Feb 2003.

The twin drivers of rising production in the region are the gradual restart of Ormet’s 268,000tpy Hannibal smelter in Ohio and of a 90,000tpy line at Alcoa’s Intalco smelter in Washington.

Acting as a brake on growth—to a limited extent in April but probably more noticeably so in May—was the loss of a 107,000tpy line mid-month at Alcoa’s Tennessee smelter. The line was knocked out by a lightning strike on a power sub-station and Alcoa warned at the time it could take “several months” to re-start.

The fastest growth continues to come from the IAI’s Asia category, which includes both India and the Persian Gulf, where existing smelters have been expanding capacity aggressively. Cumulative Jan-Apr production in the region totalled 1.208 million tonnes, up 7.3% year-on-year.

Production growth in Western Europe was just 0.3% in the first four months of this year but that represents the start of what should be a significant turnaround in the region’s fortunes.
Production fell by 4% last year due to closures such as the 133,000tpy Hamburg smelter and the 70,000tpy Stade smelter in Germany.

Hamburg has just re-opened, probably just missing the IAI’s April count, while Alcoa’s new Fjardaal smelter in Iceland—and to a lesser extent a further 40,000tpy expansion at Century’s Nordural smelter in the same country—should underpin further production growth in the region over the rest of 2007. The 320,000tpy Fjardaal smelter has just started a prolonged ramp-up that will run through the end of the year.

Only one of the IAI’s main regional categories—Africa—showed a contraction in production in the first four months of this year. Output fell by 1.2% to 604,000t in the period and here we suspect we are seeing the impact of the mid-March suspension of activities at the Valco smelter in Ghana.

The Ghana government and Alcoa had been hoping to restart 120,000tpy of capacity at Valco but the programme only made it as far as 80,000t at the end of 2005 before power availability issues—a chronic problem for this 200,000tpy plant (it has closed 11 times in its history)—resurfaced and forced a complete suspension again in March 2007.