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Hindalco's Novelis Sees Aluminum Demand Rising
Mar 9,2010 15:31CST
industry news

BOSTON, Mar. 9 -- Novelis Inc., the U.S.-based aluminum unit of India's Hindalco Industries Ltd., sees global demand for the industrial metal rising about 4 percent annually in the next five years, President Philip Martens said.

The strongest growth, of about 6 percent to 10 percent annually, will come from Asia, followed by 7 percent to 8 percent increases in South America, Martens said yesterday in a telephone interview. North American demand may increase 1 percent to 3 percent annually, followed by Europe, which will see gains of 1 percent or less, he said.

"We're beginning to see an increase in demand in what we call industrial products, it's really electronic consumer durables," Martens, 49, said in an interview from Novelis headquarters in Atlanta. "Anything that requires an aluminum carrier for stability, light weight and other factors, we do see demand primarily coming out of Asia. Most of the products are produced there and shipped worldwide."

Novelis is seeing the strongest demand growth for metal used in products such as flat-screen televisions, laptop computers, gaming stations, cell phones and cameras, Martens said. Aluminum for delivery in three months has increased 72 percent in the past year to $2,231 a ton on the London Metal Exchange, driven by demand from China.

Hindalco, India's largest aluminum maker, acquired Novelis in 2007 for $6 billion, two years after it was spun off by Canada's Alcan Inc. in 2005. Novelis had $10.2 billion in sales last year, 52 percent of which came from sales of aluminum used for beverage cans. Novelis has 12,000 employees in 11 countries.

The growth in global aluminum demand should be adequate to absorb the large inventories monitored by the LME without depressing prices, Martens said. Aluminum inventory now monitored by the exchange is 4.54 million tons.

"There is still quite a bit of inventory there," Martens said. "I think the people who own the inventory are going to be smart and will meter it out over time as demand starts to pick up. Nobody is going to rush to dump inventory on the market."



Aluminum Al

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