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Aluminum Product Demand in Asia May Rise on Recovery
Feb 22,2010 09:21CST
industry news

SEOUL, Feb. 22 -- Demand for aluminum-rolled products may climb in Asia this year, boosted by the economic recovery, according to the region's biggest producer.

"We expect the Asia-wide rebound from the financial crisis to continue in the calendar year," said Sachin Satpute, 43, vice president for sales and marketing at Novelis Korea Ltd., a unit of India' Hindalco Industries Ltd. He didn't give forecasts for the company's sales.

Increasing demand for aluminum products such as beverage cans and building materials may help extend a 45 percent gain in the benchmark price of the metal in London last year. Asian economies from China to Vietnam are picking up speed after policy makers worldwide boosted spending and slashed borrowing costs to counter the global slump.

"We certainly see the demand outlook better than last year," Satpute said in an interview yesterday in his office in Seoul. "A robust growth rate in China is going to be the lead driver."

Aluminum for delivery in three-months on the London Metal Exchange fell 1.2 percent to $2,089 a metric ton at 10:47 a.m. Seoul time. The price reached a 15-month high of $2,394 a ton on Jan. 6.

Aluminum is the "stand-out metal," showing demand growth that is outpacing gains in global production, Barclays Capital said in a report on Feb. 12. Earlier, Barclays forecast aluminum may average 25 percent higher at $2,088 a ton this year.

Chinese, Korean Demand

Novelis may benefit from a switch to aluminum from steel in can production in Asian countries including China and South Korea, said Satpute, who has more than 21 years of experience in the aluminum industry.

"There is a growing preference for aluminum-rolled products for beverage cans," he said. "We have seen this in Korea and this might be replicated in China and South East Asia."

South Korea accounts for about 40 percent of the company's sales, he said. Demand is also being boosted by increased demand for light-emitting diode televisions, he said.

China, the world's biggest producer and consumer of aluminum, posted economic growth of 10.7 percent in the fourth quarter, the fastest pace in two years. The transport industry is the largest source of demand for the metal followed by construction and packaging.

Novelis Korea, which buys primary aluminum from Australia and Russia, will increase the use of scrap metal, he said. Scrap currently accounts for about a third of its feedstock needs.

"It's an ideal thing," he said. "It is environment friendly and economically attractive."

Novelis Korea is 68 percent owned by Atlanta-based Novelis Inc., which is wholly owned by Hindalco.



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