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One third of global aluminum sector running at loss - Perpetual

Steel News - Published on Wed, 16 Nov 2011

Reuters quoted fund manager Perpetual as saying that nearly a third of the world\'s aluminum is being produced at a loss because of metal prices dampened by high inventories and weak growth prospects.

Mr Andrew Corbett metals analyst for the Australian fund, which has about USD 3.5 billion invested in the resources sector, said that at the same time, the high cost associated with shutting down over producing aluminum smelters was keeping markets amply supplied with fresh tonnages.

Mr Corbett said that “Aluminum producers stood to gain over the longer term from a drive among consumers to use more of the light metal which is seen as more environmentally friendly than some other metals and a lack of investment in new smelters while so many existing ones run at a loss. But more immediately weak fundamentals and stagnant consumption would weigh on the sector\'s prospects.”

Aluminum prices have tumbled nearly 20% in the past 3 months to around USD 2,165 per tonne while London Metal Exchange stocks stand at around 4.53 million tonnes or a tenth of total projected global production this year. 30% of the world\'s aluminum industry is underwater at these current prices.

Alcoa Inc said that the economic slowdown had hurt demand and knocked prices lower denting its Q3 profit. Aluminum Corporation of China Limited was also feeling the effects of a weak market, missing forecasts for Q3 earnings. Rio Tinto has formed a separate division to hold six Australian and New Zealand units being put up for sale including smelters.

(Sourced from Reuters)

Posted By : admin on Wed, 16 Nov 2011
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