MI ANALYSIS: Non-China aluminium production growth accelerating

Growth in production of primary aluminium outside of China is gradually accelerating with each passing month of 2007.

The latest figures from the International Aluminium Institute (IAI) for July showed cumulative production of 14.250 million tonnes in the first 7 months of this year, representing year-on-year growth of 3.1%. That’s the fastest rate since the second quarter of last year and compares with the 1.7% growth rate notched up over 2006 as a whole.

That growth rate was masked in July by the headline figure, which showed daily average production unchanged month-on-month at 67,800t.

The constraining influence was Africa, where daily output fell to a two-year low of 4,770t. A key factor in the region is the mothballing (again) in May of the VALCO smelter in Ghana. However, it is also possible that production in the south of the continent is continuing to be constrained by the well-documented power problems that have plagued the grid this year and have forced load-shedding by South Africa’s Eskom.

Beyond that one region, however, growth is trending steadily higher.

North American production is growing above trend at 4.0% growth in the Jan-July period. Average daily production at 15,520t in July is the highest it’s been in years. There is more potential as well since Alcoa has one line down at its Rockdale smelter in Texas (due to anode availability) and Ormet Corp has been forced to delay the restart of the last, sixth potline at its Hannibal smelter after the hurricane hit on the Jamalco alumina refinery in Jamaica last month.

The fastest growth rate—7.3%--is still coming from the Asian (not including China) region thanks to incremental expansions in the Persian Gulf and India (more on the latter in tomorrow’s issue).

However, production in eastern Europe is also accelerating thanks to the commissioning of UC RUSAL’s new 300,000tpy Khakaz smelter.

Production in Western Europe grew by a modest 1.5% in Jan-July 2007 after falling by 4% last year due to capacity closures.

Here again, there is potential for an acceleration in the coming months with Alcoa’s new Fjardaal smelter in Iceland only very slowly ramping up towards 320,000tpy capacity and Trimet still bringing back on line the previously mothballed 133,000tpy Hamburg smelter in Germany.