Courtsey:According to Karen Norton from Reuters.
Analysts feel Supply problems will support the aluminium market in the near term, but high inventories will act as a brake on any attempt to move sharply higher. The LME three-months price reached a six-month high of $2,738 a tonne last week, driven up by severe winter weather in China and its worst-ever power cuts. Traders last estimated that around 1.5 million tonnes of annual aluminium smelting capacity had been shut. Producers in southern Africa cut their power usage to help ease a power shortage there. Adams of Basemetals.com feels prices could get up to $2900 in next month but can't be sustained due to high stock levels. Another consultant Angus MacMillan said the supply woes would make some difference to the market balance this year, but also thought the worsening economic outlook would counter that to some extent by having a negative impact on demand.Most analysts had been predicting a modest supply surplus this year.
(Thus the outlook could be threatened if analysts have undermined the extent of the current problems.) Stephen Briggs, economist at SG Corporate and Investment Banking thought aluminium had the least downside potential of all the LME-traded metals as recession loomed, due in part to the fact that it had made the least gains in recent years.
Some recent developments in production, stocks and prices that may influence the direction of the aluminium market in 2008 has been listed in the report.
PRODUCTION:
Jan. 31 - Rio Tinto Ltd/Plc said it reached a new power supply pact with the local utilities authority for its Kitimat aluminium smelter in British Columbia, Canada, allowing it to proceed with a 125,000 tpy expansion to 400,000 tpy.
Jan. 31 - BHP Billiton said it would cut power usage at its three aluminium smelters in southern Africa by 10 percent to help ease a power shortage. The reduction would gradually take place at the Hillside and Bayside smelters in South Africa and the Mozal operation in Mozambique and be completed in around five days.
Jan. 30 - China's worst-ever power shortage and severe winter: As of Feb. 5, traders estimated up to 1.5 million tonnes of aluminium smelting capacity was shut in order to conserve power to residences.
Jan. 30 - Rio Tinto said its planned Coega aluminium smelter in South Africa is progressing despite the country's power crisis. The project, due to produce 720,000 tpy of aluminium, will go the Rio Tinto board around mid-2008 for final approval.
Jan. 29 - Netherlands-based aluminium company Vimetco said it would focus on adding bauxite mine assets to its portfolio in a bid to become a fully integrated producer of the metal. On Feb. 5, the company said the Ministry of Mines in Guinea granted it a reconnaissance permit for the prospecting of bauxite in the Kindia Prefecture in Guinea. Vimetco also said its Tulcea alumina refinery in Romania, now closed for rehabilitation work, would probably restart in the second half of next year, subject to overall market conditions. The refinery has the capacity to produce around half a million tpy of alumina.
Jan. 25 - China's Bosai Minerals Group Co said it would invest $694 million to build a 1 million tpy alumina refinery in Guyana. Construction would start in the first half of 2009 and begin production two years later. Bosai expects its alumina production capacity in China to jump to 500,000 tpy from last year's 200,000 after a 300,000 tpy plant near Chongqing launches production by the end of 2008. Bosai expects to increase its aluminium smelting capacity to 200,000 tonnes in 2008 from last year's 130,000 tonnes.
Jan. 25 - China produced 12,283,600 tonnes of primary aluminium in 2007, up 33.8 percent from a year earlier, the National Bureau of Statistics said. Production of alumina rose by 47.7 percent over the same period to total 19,507,900 tonnes.
Jan. 25 - Power shortages could slow aluminium output growth this year to 22 percent to an estimated 15.0-15.5 million tonnes, from 12.3 million tonnes in 2007, out of a capacity of 16 million, industry officials said.
Jan. 21 - Daily average primary aluminium output in December rose to 69,700 tonnes compared with an upwardly revised 69,300 in November, provisional figures from the International Aluminium Institute (IAI) showed. In December 2006, daily average output was 66,400 tonnes.
Jan. 18 - Ormet Corp. said its Hannibal aluminium smelter in Ohio was completely up and running. At full capacity the plant produces 260,000 tpy of aluminium. The company restarted the last of its smelter's six potlines on Nov. 28.
Jan. 17 - An official of South African power utility Eskom said Alcan's Coega aluminium smelter plant could be delayed as it reviews its power supply for the project.
Jan. 11 - The annual rate of primary U.S. aluminium production surged 17.7 percent to 2,712,197 tonnes in December from 2,303,998 tonnes in December 2006, the Aluminum Association said. December's output rate was the highest since April 2003. For the year, 2007 production increased 12.2 percent to 2,559,673 tonnes from 2,280,916 tonnes a year earlier.
PRICES
Having ended 2007 just above $2,400 a tonne, aluminium prices trended higher in early January, albeit within their well-established trading range.
Worries about a recession in the United States took the whole LME complex lower later in the month, with aluminium trading down to $2,377 on Jan. 22.
But prices recovered and then shot higher at the end of last month as it emerged that Chinese smelters had been hit by power shortages and severe weather conditions. This came on top of power supply woes in South Africa.
On Feb. 1, the three-months price reached a six-month high of $2,738 a tonne and, despite easing since then, further gains have been mooted.
In January, the twice-yearly Reuters base metals price poll of 42 analysts put the 2008 median average for the LME cash aluminium price at $2,506 a tonne in 2008 and $2,540 in 2009. In 2007 the price averaged over $2,665 a tonne.
STOCKS
Total exchange stocks were 1,065,183 tonnes at the end of January, little changed from 1,046,002 tonnes. Of that total, some 956,475 tonnes were held in LME warehouses, compared with 929,450 tonnes a month earlier. Total visible stocks, including latest International Aluminium Institute (IAI) unwrought stocks (0#STOCKS-IAI) were 2,618,183 tonnes, equating to about 26 days of consumption.
Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka totalled 198,600 tonnes in December, up 12 percent from a record low of 178,100 tonnes a month earlier, an official at Marubeni Corp said. Inventories may have risen due to the arrival during the month of delayed shipments from Venezuela, the official said. Inventories were about 15 percent below the year-earlier level of 233,900 tonnes.
Analysts feel Supply problems will support the aluminium market in the near term, but high inventories will act as a brake on any attempt to move sharply higher. The LME three-months price reached a six-month high of $2,738 a tonne last week, driven up by severe winter weather in China and its worst-ever power cuts. Traders last estimated that around 1.5 million tonnes of annual aluminium smelting capacity had been shut. Producers in southern Africa cut their power usage to help ease a power shortage there. Adams of Basemetals.com feels prices could get up to $2900 in next month but can't be sustained due to high stock levels. Another consultant Angus MacMillan said the supply woes would make some difference to the market balance this year, but also thought the worsening economic outlook would counter that to some extent by having a negative impact on demand.Most analysts had been predicting a modest supply surplus this year.
(Thus the outlook could be threatened if analysts have undermined the extent of the current problems.) Stephen Briggs, economist at SG Corporate and Investment Banking thought aluminium had the least downside potential of all the LME-traded metals as recession loomed, due in part to the fact that it had made the least gains in recent years.
Some recent developments in production, stocks and prices that may influence the direction of the aluminium market in 2008 has been listed in the report.
PRODUCTION:
Jan. 31 - Rio Tinto Ltd/Plc said it reached a new power supply pact with the local utilities authority for its Kitimat aluminium smelter in British Columbia, Canada, allowing it to proceed with a 125,000 tpy expansion to 400,000 tpy.
Jan. 31 - BHP Billiton said it would cut power usage at its three aluminium smelters in southern Africa by 10 percent to help ease a power shortage. The reduction would gradually take place at the Hillside and Bayside smelters in South Africa and the Mozal operation in Mozambique and be completed in around five days.
Jan. 30 - China's worst-ever power shortage and severe winter: As of Feb. 5, traders estimated up to 1.5 million tonnes of aluminium smelting capacity was shut in order to conserve power to residences.
Jan. 30 - Rio Tinto said its planned Coega aluminium smelter in South Africa is progressing despite the country's power crisis. The project, due to produce 720,000 tpy of aluminium, will go the Rio Tinto board around mid-2008 for final approval.
Jan. 29 - Netherlands-based aluminium company Vimetco said it would focus on adding bauxite mine assets to its portfolio in a bid to become a fully integrated producer of the metal. On Feb. 5, the company said the Ministry of Mines in Guinea granted it a reconnaissance permit for the prospecting of bauxite in the Kindia Prefecture in Guinea. Vimetco also said its Tulcea alumina refinery in Romania, now closed for rehabilitation work, would probably restart in the second half of next year, subject to overall market conditions. The refinery has the capacity to produce around half a million tpy of alumina.
Jan. 25 - China's Bosai Minerals Group Co said it would invest $694 million to build a 1 million tpy alumina refinery in Guyana. Construction would start in the first half of 2009 and begin production two years later. Bosai expects its alumina production capacity in China to jump to 500,000 tpy from last year's 200,000 after a 300,000 tpy plant near Chongqing launches production by the end of 2008. Bosai expects to increase its aluminium smelting capacity to 200,000 tonnes in 2008 from last year's 130,000 tonnes.
Jan. 25 - China produced 12,283,600 tonnes of primary aluminium in 2007, up 33.8 percent from a year earlier, the National Bureau of Statistics said. Production of alumina rose by 47.7 percent over the same period to total 19,507,900 tonnes.
Jan. 25 - Power shortages could slow aluminium output growth this year to 22 percent to an estimated 15.0-15.5 million tonnes, from 12.3 million tonnes in 2007, out of a capacity of 16 million, industry officials said.
Jan. 21 - Daily average primary aluminium output in December rose to 69,700 tonnes compared with an upwardly revised 69,300 in November, provisional figures from the International Aluminium Institute (IAI) showed. In December 2006, daily average output was 66,400 tonnes.
Jan. 18 - Ormet Corp. said its Hannibal aluminium smelter in Ohio was completely up and running. At full capacity the plant produces 260,000 tpy of aluminium. The company restarted the last of its smelter's six potlines on Nov. 28.
Jan. 17 - An official of South African power utility Eskom said Alcan's Coega aluminium smelter plant could be delayed as it reviews its power supply for the project.
Jan. 11 - The annual rate of primary U.S. aluminium production surged 17.7 percent to 2,712,197 tonnes in December from 2,303,998 tonnes in December 2006, the Aluminum Association said. December's output rate was the highest since April 2003. For the year, 2007 production increased 12.2 percent to 2,559,673 tonnes from 2,280,916 tonnes a year earlier.
PRICES
Having ended 2007 just above $2,400 a tonne, aluminium prices trended higher in early January, albeit within their well-established trading range.
Worries about a recession in the United States took the whole LME complex lower later in the month, with aluminium trading down to $2,377 on Jan. 22.
But prices recovered and then shot higher at the end of last month as it emerged that Chinese smelters had been hit by power shortages and severe weather conditions. This came on top of power supply woes in South Africa.
On Feb. 1, the three-months price reached a six-month high of $2,738 a tonne and, despite easing since then, further gains have been mooted.
In January, the twice-yearly Reuters base metals price poll of 42 analysts put the 2008 median average for the LME cash aluminium price at $2,506 a tonne in 2008 and $2,540 in 2009. In 2007 the price averaged over $2,665 a tonne.
STOCKS
Total exchange stocks were 1,065,183 tonnes at the end of January, little changed from 1,046,002 tonnes. Of that total, some 956,475 tonnes were held in LME warehouses, compared with 929,450 tonnes a month earlier. Total visible stocks, including latest International Aluminium Institute (IAI) unwrought stocks (0#STOCKS-IAI) were 2,618,183 tonnes, equating to about 26 days of consumption.
Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka totalled 198,600 tonnes in December, up 12 percent from a record low of 178,100 tonnes a month earlier, an official at Marubeni Corp said. Inventories may have risen due to the arrival during the month of delayed shipments from Venezuela, the official said. Inventories were about 15 percent below the year-earlier level of 233,900 tonnes.
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