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Russia and Brazil woes could lead to aluminium supply shortage -Mr Svein Richard

Metal News - Published on Wed, 18 Apr 2018

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Reuters reported that the global aluminium market could face supply shortages because of US sanctions on Russia and Norsk Hydro’s production cuts in Brazil. Hydro’s chief executive Mr Svein Richard Brandtzaeg told Reuters that industries ranging from automakers to soda-can producers are worrying over deliveries and sharp price hikes.

Over the weekend, Hydro cut output from the Albras aluminium plant in Brazil by half, as it had previously warned, in response to an unresolved dispute at its nearby Alunorte alumina refinery, which supplies the key raw material.

Mr Brandtzaeg said that “If this lasts long, it’s possible it will also lead to production cuts at our Norwegian smelters, which also receive alumina from Alunorte.”

Mr Brandtzaeg added that “This is not positive for the aluminium industry. We’ve got long-term customers seeking stable relations, and our car-making customers are particularly worried in this situation, both by the prices but also by the cost of delivery premiums.”

Aluminium prices hit six-year highs on the London Metal Exchange on Monday, continuing a spike that began when the United States imposed sanctions on UC Rusal, the world’s second-biggest producer, as well as Hydro’s own cuts.

Mr Brandtzaeg said at Hydro’s headquarters in Oslo that “There is a shortage of alumina, and there will also be a shortage of aluminium unless Rusal can find new markets quite quickly.”

Rusal could potentially maintain its production by exporting more to Asian countries, although this could in turn disrupt the regional market balance, he added.

Mr Brandtzaeg said that “The metal would remain part of the global balance and we’d have to expect more exports from Asia into our European markets, particularly since China faces restrictions on exports to the US.”

US President Donald Trump last month imposed import tariffs of 10 % on aluminium and 25 % on steel to protect US metal producers from cheap imports.

Rio Tinto’s declaration of force majeure on certain customer contracts as a result of the US sanctions on Rusal also boosted aluminium prices.

Hydro’s cutbacks at Albras, South America’s largest aluminium plant with an annual capacity of 460,000 tonnes, amount to an equivalent of 230,000 tonnes per year, and will last until Alunorte is back to full capacity.

Following heavy rains in February, Hydro admitted there had been unregulated emissions of water into a river at the Alunorte plant, but denied it had contaminated the environment.

Alunorte, the world’s largest alumina refinery, declared force majeure after Brazilian authorities ordered it to halve its production.

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Posted By : Rabi Wangkhem on Wed, 18 Apr 2018
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