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Major aluminum market developments in June

Steel News - Published on Sat, 16 Jul 2011

Reuters reported that aluminum prices lost ground in June and while they may drift lower as demand softens for seasonal reasons the market is expected to hold firm in coming months even though it is on course for another year of supply surplus.

Mr Robin Bhar analyst of Credit Agricole said that \"Demand has slackened a bit, but we expect it to accelerate after the summer slowdown with robust growth from both transport and packaging.\"

Mr Angus MacMillan Independent consultant expected the market to meet with support at USD 2,400 and USD 2,350 if the USD 2,500 level is breached with conviction. The London Metal Exchange 3 months aluminum price was last indicated at USD 2,485 per tonne.

Mr MacMillan said that vast inventories and the prospect of another year of supply surplus would not dent sentiment because a large amount of LME warehouse stocks were still tied up in financing deals and not immediately available. In the meantime, though, output is rising while demand growth outside top consumer China is slowing.

Mr Neil Buxton MD of GFMS Consulting also pointed to slackening demand and thought prices would generally ease in the next month or two.

Below are some of the more significant recent developments in production and prices that may continue to influence the direction of the market in 2011.

Production:
June 23 - BHP Billiton said that the estimated cost of expanding the Worsley alumina project in Western Australia had increased by more than half due to its complexity and inflationary pressures. BHP which has an 86% interest in the project, said its share of the estimated cost had increased to USD 2.995 billion from the USD 1.9 billion figure given in May 2008.

June 20 - Provisional figures from the International Aluminum Institute (IAI) showed that daily average primary aluminum output in May dropped to 69,900 tonnes compared with a revised 70,300 tonnes in April and 66,400 tonnes in May 2010.

June 20 - Provisional figures from the International Aluminum Institute showed that daily average primary aluminum output in China rose to 49,700 tonnes in May from 48,400 tonnes in April. Total primary aluminum production in China rose to 1.541 million tonnes in May from 1.451 million tonnes in April and 1.418 million tonnes in May last year.

June 15 - According to the National Bureau of Statistics, China produced 7,052,000 tonnes of primary aluminum in the first 5 months of the year up 4.0% from year ago levels. Output of alumina rose by 15.6% over the same period to 14,315,000 tonnes.

June 7 - US aluminum producer Ormet Corporation has begun to restart its idled alumina refinery in Burnside, La and expects to be producing the intermediate material for making aluminum metal in the Q4.

Prices:
Aluminum prices ended June at USD 2,532 per tonne down from USD 2,675 the previous month. After an early high of USD 2,695, the market tended to have a downwards bias through to the end of the month as global demand worries weighed.

In early May, the market hit USD 2,803, its highest since August 2008. The month\'s low of USD 2,482 was recorded on June 27 as investors remained cautious over continuing uncertainty about the debt crisis in Greece and US monetary policy. Attempts to rebound from there ran out of steam around the USD 2,600 mark and prices retreated on worries that the euro zone debt crisis was spreading to Italy and Spain.

According to the latest Reuters poll in January, aluminum cash prices are expected to average USD 2,484 per tonne in 2011 compared with USD 2,173 last year.

(Sourced from Reuters)

Posted By : admin on Sat, 16 Jul 2011
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