Aluminum

Aluminum

Postby winston » Thu Jul 10, 2008 10:32 pm

China's Aluminum Producers Agree to Cut Output by 10% (Update4)
By Xiao Yu

July 10 (Bloomberg) -- China's biggest aluminum producers, the largest in the world, agreed to cut output by as much as 10 percent to ease a power shortage, sending metal prices to a record.

Aluminum Corp. of China Ltd. and 19 of its peers signed the agreement today to curb supply by between 5 percent and 10 percent, said a government official who asked not to be identified. Aluminum gained as much as 5.3 percent to $3,360 a metric ton on the London Metal Exchange after the announcement. Norsk Hydro led gains by shares of non-Chinese producers.

The reductions may help alleviate a sixth year of power shortages in the world's fourth-largest economy and curb Chinese aluminum exports that jumped 43 percent in June. The energy used by China's aluminum smelters each week is enough to provide power for more than 2 million people for a year.

``The production cut will remove at least 500,000 tons of output, which will significantly change the balance of the aluminum market in China and globally,'' Chris Ding, an analyst at China International Capital Corp., said in Beijing.

The companies, which account for 70 percent of the country's output, the Ministry of Commerce and the China Nonferrous Metals Industry Association agreed on the cut at a meeting today in Shandong province, the official said. An official announcement is expected later today, he said.

Lack of Coal

China is grappling with power shortages caused by economic growth that averaged more than 10 percent annually in the past 5 years. Government control of power prices means utilities can't afford to buy enough coal. Aggravating the shortfall, the government has shut thousands of small and unsafe coal mines.

Power accounts for between 30 percent and 40 percent of the cost of making aluminum. China produced 12.6 million tons of the metal last year.

Aluminum Corp, the nation's largest producer, Qingtongxia Aluminum Group Co., Yugang Longquan Aluminum Industrial Co., Yunnan Aluminum Co. were present at today's meeting, the official said.

Zhao Shengmao, deputy general manager of Qinghai Qiaotou Aluminum Electricity Co. who was at the meeting, confirmed the agreement. He declined to comment further.

Short of Power

``They have very difficult power availability issues and are now very large exporters of aluminum,'' Michael Rawlinson, head of mining, resources and energy, at Liberum Capital Ltd., in London wrote today. ``Cutting aluminum supply alleviates the power crisis without hurting the goal of self sufficiency.''

Exports of aluminum and alloys jumped 43 percent to 123,538 tons in June from a month earlier, customs data showed. That's the highest since August 2006.

China is expecting power shortages in the southern, eastern and central provinces in the summer as demand exceeds supply, the government said in June. It hosts the Olympics in Beijing next month.

Aluminum prices have rallied 37 percent this year because of earlier supply disruptions in China and South Africa. The metal for delivery in three months on the London Metal Exchange traded at $3,340 a ton at 2:38 a.m. London time.

Chinese aluminum prices may rise 7 percent to 21,000 yuan ($3,068) a ton, CICC's Ding said.

Norsk Hydro Gains

Norsk Hydro, the world's fourth-largest aluminum producer, rose as much as 7.6 percent in Oslo trading. Vedanta Resources Plc gained as much as 4.4 percent in London and Eurasian Natural Resources Corp. increased as much as 5.9 percent.

``This will be positive for all aluminum producers,'' Andrew Keen, an analyst at Sanford C. Bernstein in London, said. ``Norsk Hydro is the most pure-play aluminum stock in Europe and you will probably see it benefit most directly.''

China shut 2.5 percent of its coal-fired power plants as of July 6, data from the State Grid Corp. of China showed. Coal inventories at State Grid, the country's biggest power distributor, were enough for about 11 days of consumption as of July 6, down from 15 days in March.

Shanxi province this week issued a ``red alert'' and said it will limit power supplies to energy-intensive factories. Henan province has restricted electricity use in eight cities because of fuel shortages, Xinhua News Agency said June 27.

Five smelters in Shanxi this week said they cut output because of a power shortage.
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Re: Aluminum

Postby winston » Tue Jul 15, 2008 9:36 pm

Goldman Raises Aluminum Price Estimates on China Cuts (Update1)
By Xiao Yu and Li Xiaowei

July 15 (Bloomberg) -- Goldman Sachs Group Inc. raised its aluminum price forecasts by as much as 21 percent after China, the world's biggest producer, cut output because of power shortages.

The bank raised its 2008 estimates to $1.39 a pound from $1.30, according to an e-mailed report. The price forecast for 2009 was raised to $1.60 a pound from $1.32, and for 2010 to $1.45 from $1.25.

China's largest aluminum smelters agreed on July 10 to cut output by as much as 10 percent, sending prices to a record. The reductions may help alleviate a sixth year of power shortages in the world's fourth-largest economy and curb Chinese aluminum exports that surged the most in more than three years in June.

``China's supply demand balance holds the key to higher aluminum prices,'' Goldman said in the report. ``Increased power constraints in the country and other regions may accelerate this process by limiting capacity expansions.''

Aluminum for three month delivery fell 0.5 percent to $3,209 a metric ton at 11:46 a.m. in Hong Kong. The metal reached a record $3,380.15 a ton on July 11.

Aluminum is the most-energy intensive metal to make. The energy used by China's aluminum smelters each week is enough to provide power for more than 2 million people for a year.


Global Deficits

The Goldman analysts cut their expectations for a global aluminum surplus of 275,000 tons this year to 62,000 tons because of power shortages in China and South Africa.

The reductions announced by China's producers equates to a maximum output cut of 400,000 tons in the second half.

Aluminum exports from China jumped to the highest since December 2004 in June as smelters took advantage of rising global prices. Sales of the metal and its products rose for a fourth month to 300,000 tons.

``More exports are good for the domestic market and could be bearish for London prices,'' Li Jingyuan, an analyst at Haitong Futures Co., said from Shanghai. ``Yet we believe rising production costs due to power shortage is what investors are more concerned with than supply-side news.''

Chinese aluminum demand will rise 20 percent next year and 15 percent in 2010, resulting in deficits, said Goldman analysts Oscar Cabrera, Aldo Mazzaferro and Sabrina Grandchamps.

Aluminum is used in the making of parts in planes and cars.
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Re: Aluminum

Postby winston » Tue Jul 29, 2008 3:38 pm

Nalco may shutdown alumina refinery on coal shortage

National Aluminium, India's biggest state-run producer of the metal, may be forced to shutdown its 1.6 million-tonne alumina refinery in a few days because of a coal shortage.

Daily output at the Damanjodi plant in the eastern Orissa state has halved to about 2,000 tonnes since July 26, said chairman CR Pradhan.

The refinery burns 2,500 tonnes of coal everyday to make 4,500 tons of alumina, he said.

BLOOMBERG
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Re: Aluminum

Postby kennynah » Tue Jul 29, 2008 4:30 pm

tink tink tink.....coal shortage....

arch coal, ach, adm ??
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Re: Aluminum

Postby Dubby » Mon Aug 04, 2008 4:31 pm

Aluminum's 12% Summer Swoon Masks Looming Shortage, Turnaround

By Brett Foley
Aug. 4 (Bloomberg) -- Aluminum, after plunging 12 percent in the past three weeks, may be poised to rebound.

Higher gas prices are curbing production that is already failing to keep pace with demand for the metal used in jetliners, drink cans and foil wrap. Abu Dhabi and Bahrain scuttled plans for smelters, and Chinese plants cut output by 10 percent. Alcoa Inc. plans to idle capacity in Texas, and 120,000 metric tons of production will be lost in southern Africa. Citigroup Inc. and Deutsche Bank AG predict a supply deficit through 2010. Barclays Capital estimates a 70 percent jump in the average aluminum price through 2009.

``We are bearish on most metals, but aluminum is the metal we have the most bullish feelings for because of high energy prices,'' said Chris Wang, portfolio manager at SYW Capital Management LLC in New York.

A 25 percent jump in natural-gas prices, used by electricity providers in the Persian Gulf, has persuaded governments in the region to shift the fuel to production of liquefied natural gas instead of aluminum. The canceled Mideast smelters would have increased world supplies by 2.8 percent. Even with those projects production wouldn't have kept pace with global demand that is growing at 9 percent a year, twice the rate of the world's economy.

`Dead' Smelter

Rio Tinto Group, the world's second-largest aluminum producer, said July 22 that the $3 billion, 700,000-ton-a- year project in Abu Dhabi was ``dead'' because the United Arab Emirates decided not to use its gas supplies to generate power for smelters. In February, Manama-based Aluminium Corp. of Bahrain said it shelved a plan to increase capacity by 39 percent to 1.2 million tons because of insufficient gas supplies.

Energy accounts for as much as half the cost of making aluminum.

``The Middle East was seen as the most attractive place to build a smelter because of its access to cheap energy,'' said Graham Birch, who manages more than $40 billion in natural-resource stocks at BlackRock Inc. in London. ``But many things have changed in the last year that have meant it is not such an easy route.''

Rio also said it may close a 148,000-ton smelter in Anglesey, Wales, if the London-based company can't secure a new power contract when the current one expires in September 2009. Rio suspended work on a $2.7 billion South African project because it wasn't able to obtain guaranteed power.

Lagging Metal

Aluminum for delivery in three months on the London Metal Exchange closed at $2,934 a ton on Aug. 1. It traded at a record $3,380 a ton on July 11.

Aluminum is cheap compared with the five other metals traded on the LME. Aluminum had an annual return of 12 percent for the five years through 2007, compared with 34 percent for copper and 42 percent for lead.

In July, Frankfurt-based Commerzbank AG raised its 2008 average price estimate to $3,600 next year on expectations China, the world's largest producer, will become a net importer. Barclays Capital is estimating an average price of $4,500 in 2009.

Beverage Cans

Higher aluminum prices have eroded profit margins at can makers and auto manufacturers. Atlanta-based Coca-Cola Co., the world's biggest soda maker, said July 24 that it reduced the size of canned drinks sold in Hong Kong by 7 percent to rein in rising production costs driven by high raw material prices.

Demand is likely to increase about 9 percent this year and double by 2020, requiring about 80 new smelters able to forge 400,000 tons each, according to New York-based Alcoa, the world's third-largest aluminum producer. By 2020, Asia will consume as much aluminum as the world does today.

Other power-related curbs are compounding the problem. China's top 20 smelters, with a combined capacity of 16 million tons, agreed in July to cut 10 percent of output to ease a power shortage and ensure supplies for the Beijing Olympics. Alcoa said in June it will idle half the 120,000 tons of capacity at its Rockdale, Texas, plant because of higher energy costs.

A South African electricity shortage has curbed smelting. BHP Billiton Ltd. cut production at two smelters in the country and a plant in neighboring Mozambique.

Rising Stockpiles

Still, analysts at Lehman Brothers Holdings Inc. and London-based Dresdner Kleinwort Group Ltd. are forecasting a decline in energy prices, which would ease the pressure on smelters. Crude oil has fallen 14 percent since trading at a record $147 a barrel on July 11. Lehman said July 15 crude will average $93 a barrel next year, from a $114 so far this year. Dresdner said July 31 there will be a ``rapid price retrenchment'' before the year end as new production starts.

Furthermore, the aluminum market has yet to experience a shortage. Inventories tracked by the LME were 1.12 million tons as of Aug. 1, 34 percent more than a year earlier. Thomas Benedix, a Tiberius Asset Management AG analyst in Stuttgart, estimates that global stockpiles are about 3 million tons.

``The stockpiles are definitely capping prices in the long term.'' Benedix said.

Torsten Dennin, who manages $250 million at Deutsche Bank AG in Frankfurt, is buying aluminum futures. The contract for delivery in 63 months, the furthest forward it can be traded on the LME, has gained 44 percent in the past 12 months, compared with a 11 percent increase in the benchmark three-month price.

``Most producers are having problems at the current energy levels as the industry is very energy-intensive,'' Dennin said. ``I expect project delays and shutdowns.''

Saudi Startup

In addition to the two canceled projects in the Gulf, state-owned Saudi Arabian Mining Co. postponed the startup of its $10.5 billion venture with Rio until 2012. The Middle East has about two-thirds of the world's oil reserves and 40 percent of its natural gas.

``The main reason the governments in the Gulf have taken a step back from building new smelters is that they realized they can sell this gas into the LNG market at a much higher price,'' said Nikhil Shah, an analyst at metals consulting company CRU in London. ``It also gives them flexibility to diversify their economies.''

While the Gulf has become less welcoming for producers, no new locations for aluminum smelters have emerged, Shah said.

`Risky Areas'

``Companies are looking at areas that are much more risky as a result,'' he said.

Moscow-based United Co. Rusal, the world's largest aluminum producer, plans to expand a plant in Nigeria. Melbourne-based BHP, the biggest mining company, is looking at the Democratic Republic of Congo. Rio is talking with Libya and Algeria because those countries still have available gas supplies.

``It's a long time from when a smelter is proposed to when it starts pouring metal and many obstacles can arise in that time, especially in those riskier locations,'' BlackRock's Birch said.
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Re: Aluminum

Postby Dubby » Mon Aug 04, 2008 4:44 pm

China 2008 Aluminum Production to Rise 16% to 14.6 Million Tons
By Glenys Sim

Aug. 4 (Bloomberg) -- Aluminum production in China, the world's largest maker of the metal, may rise 16 percent to 14.6 million metric tons this year, Macquarie Group Ltd. said.

China's aluminum production capacity is expected to reach 18.6 million tons per annum at the end of 2008, analysts led by Bonnie Liu, wrote in an e-mailed report today. China is also the world's largest consumer of the metal used in airplanes and cars.

``China's aluminum industry is extremely competitive in terms of its low capex costs and resulting very quick payback period compared with aluminum smelters elsewhere in the world,'' the analysts said.

There are about 5.8 million tons of aluminum smelting projects under construction, which are set to be finished by the end of 2009, the report said. In addition, there are 2.4 million tons planned or proposed projects to be developed by domestic smelters before the end of the decade, the report said.

``We believe that China will remain a major supplier of aluminum units to the rest of the world, but different tax treatments mean that it will be much-more attractive to export products than metal or alloys,'' the report said.

Aluminum futures have gained 22 percent this year after power outages cut output in China and South Africa. The loss in Chinese output following the worst snowstorms in decades was about 350,000 tons to 400,000 tons, said the bank.

Aluminum for delivery in three months on the London Metal Exchange rose as much as 0.4 percent to $2,945 a ton at 8:51 a.m. in Singapore.

``Although low capex is a major advantage, high cash costs are the major disadvantage for Chinese smelters,'
' the report said. ``The vast bulk of Chinese smelters utilize coal as their main power source and will be paying market rates for their coal, if not for their electricity.'' Electricity accounts for around 40 percent of a Chinese aluminum smelter's costs, according to the bank.
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Re: Aluminum

Postby winston » Tue Aug 12, 2008 7:24 am

Energy-intensive aluminium MAL3 hit a three-month low of $2,830 a tonne and closed at $2,833 a tonne from $2,850 at the close on Friday.

Analysts estimate up to 45 percent of aluminium smelting costs are accounted for by electricity.

The metal, used in packaging, transport and power, hit a record high of $3,380 on July 10 on escalating worries about supplies power shortages and supplies from China, the world's top producer and consumer.

Traders said news that China exported 93,441 tonnes of unwrought primary aluminium and aluminium alloy in July, down from June's 123,538 tonnes would help support.

Opinion about aluminium's prospects is divided between those who think weak demand and an oversupplied market will hit prices and those who expect high energy prices and costs and production losses in China will boost prices.

"The proximity of prices to production costs and good consumer buying at lower levels will make aluminium one of the
better-supported metals,
" Barclays Capital said in a note.

"We see the downside from here as being limited."
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Re: Aluminum

Postby winston » Sun Aug 17, 2008 10:00 am

China to Impose Tax on Aluminum Alloy, Coke Exports
By Li Xiaowei and William Bi

Aug. 15 (Bloomberg) -- China, the world's largest aluminum producer, will impose a tax on exports of the metal's alloys to curb over-investment in energy-intensive industries.

Duties on shipments of aluminum alloy will be temporarily set at 15 percent, effective from Aug. 20, the Ministry of Finance said in a statement today, without elaborating. Export taxes on coking coal and coke will be increased.

The tax may curb aluminum alloy exports, boosting aluminum prices, which jumped to a record last month after some Chinese producers agreed to cut output to help the world's fourth- largest economy combat a sixth year of power shortages.

``The rate of increase is higher than we expected,'' Wan Ling, analyst with CRU International Ltd., said by phone from Beijing. ``This will further depress a sluggish domestic market, but will help LME prices.''

China is grappling with power shortages caused by economic growth that averaged more than 10 percent annually in the past 5 years. Government control of power prices means utilities can't afford to buy enough coal. Aggravating the shortfall, the government has shut thousands of small and unsafe coal mines.

Taxes on coke exports will be raised to 40 percent from 25 percent, while the rate on coking coal will be lifted to 10 percent from 5 percent, it said. The ministry also imposed a 10 percent tax on metabituminous coal, the statement said, without saying how long the taxes will be in place.

Production Cuts

China's aluminum smelters, the largest in the world, have cut production by more than 10 percent and will limit output until the end of the year because of power shortages and weak export demand, Wen Xianjun, deputy chairman of China Nonferrous Metal Industry Association, said Aug. 6

The reduction accord equates to about 3 percent of the nation's production last year. China produced 12.6 million tons of the metal in 2007. Global production was 38 million tons, according to Citigroup Inc.

China's exports of aluminum and alloys jumped 67 percent in the first seven months, reaching a 22-month high in June, customs data showed. The surge was led by alloy sales as primary aluminum exports were reduced by a 15 percent duty.

``The government is making it more difficult for the aluminum industry'' in response to increased aluminum alloy exports after China raised the export tax on primary aluminum in 2006, said Michael Widmer, an analyst at Lehman Brothers Holdings Ltd. in London.

The latest move follows the removal of export rebates on zinc and silver this month, also to ease the power shortage.
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Re: Aluminum

Postby winston » Wed Sep 24, 2008 9:44 am

Shanghai aluminium hits 4 year low on oversupply worries

SINGAPORE, Sept 23 (Reuters) - Shanghai aluminium futures fell 1.8 percent on Wednesday to their lowest since August 2004 on concerns of swelling international stockpiles, and worries China will continue its smelter expansion programme.

Shanghai metal fell 285 yuan, or 1.8 percent, to 15,360 yuan ($2,255), after London Metal Exchange stocks of the lightweight metal jumped by another 3,050 tonnes overnight. LME aluminium rose $2 to $2,510.

Inventories have surged more than 20 percent since mid-August
to stand at 1.36 million tonnes, enough for 13 days of world consumption.
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Re: Aluminum

Postby winston » Mon Nov 24, 2008 2:37 pm

China aluminum export tax cuts point to severe slowdown - Citigroup

BEIJING (XFN-ASIA) - Citigroup said the recent decision by China's Ministry of Finance to lower export taxes on aluminum products to five pct from 15 pct reveals the severity of the slowdown.

"The tax change will see increased exports and serve to subsidize China's high cost aluminium industry, reducing the likelihood of further Chinese production curtailments. This is a sharp reversal of policy given Beijing efforts to curb growth in the aluminium industry over the last few years," Citi said.

It said the move "serves to highlight how sharp China's slowdown has become."

It said some provincial governments are also cutting power prices to aluminum smelters, noting that slowing production has effectively "ended the power crisis."
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