ALUMINIUM-Major Market Developments in June -Shanghai Metals Market

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ALUMINIUM-Major Market Developments in June

Industry News 08:55:45AM Jul 20, 2010 Source:SMM

LONDON, July 20 -- The global aluminium market remains in over-supply and prices will stay under pressure as global economic worries persist and inventories build over the quieter period for demand in the northern hemisphere summer, some analysts say.

"I see stocks accumulating over the quieter summer period and the next big move in prices is on the downside," said independent consultant Angus MacMillan.

He expected prices to fall towards $1,850/$1,800 a tonne, citing a deteriorating economic environment in Europe and Japan and thought $1,700 was a possible target at some point during the third quarter.

"Sentiment is certainly going to suffer," he said.

Credit Agricole analyst, Robin Bhar, thought prices would be largely range bound in the next month or so.

He thought movements would be determined mainly by macro-economic news rather than aluminium's own fundamentals.

Bhar said the $1,800 level might be tested, but he expected it to emerge intact.

At 1206 GMT the London Metal Exchange three-months aluminium price <CMAL3> was indicated at $2,025 a tonne.

Neil Buxton, managing director at GFMS Consulting said he was cautious about plans to idle 700,000 tonnes of capacity in China's Henan province.

"Unless those numbers are confirmed we're reluctant to change our view, which is one of quite large over-supply," he said.

Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in 2010.

PRODUCTION:

June 30 - India has ordered a new panel to investigate if Vedanta Resources Plc's <VED.L> plans to mine bauxite could impact local tribes and wildlife, possibly further delaying a project already running about two years late. An Environment Ministry statement said the four-member committee would investigate the "specific impact on the livelihood, culture and material welfare" of a local tribal group in eastern Orissa state. It was to submit its findings in 30 days.

June 29 - State-controlled Saudi Arabian Mining Co <1211.SE> said its board had agreed on a $4.5 billion financing plan for the first phase of a joint aluminium plant with U.S. firm Alcoa <AA.N>. [ID:nLDE65S1IP] The joint venture started work on the $10 billion complex, which it said will be the world's largest fully integrated aluminium complex, earlier this month.

June 28 - A plan to idle 700,000 tonnes of annual aluminium capacity by 13 smelters in China's Henan province could prompt other firms to follow suit if prices stay weak. The announced capacity cuts are likely to be in place by early July as low prices and high costs hit profitability at the units, Liu Libin, vice-chairman of the Henan Nonferrous Metals Industry Association, told Reuters, adding the smelters had started production cuts in the middle of June.

June 25 - Alcoa Inc said it ratified a new four-year contract with the United Steelworkers union covering 5,400 employees at ten of its locations in the United States.

June 22 - Alcoa said its Fjardaal smelter in Iceland had been a success and that the company might consider other investment on the island, which has been hit by a deep economic crisis.

June 21 - Daily average primary aluminium output in China falls to 45,700 tonnes in May from 46,400 tonnes in April, provisional figures from the International Aluminium Institute showed. Total primary aluminium production in China rose to 1.418 million tonnes in May from 1.392 million tonnes in April and 984,000 tonnes in May last year.

June 21 - Daily average primary aluminium output rose to 66,500 tonnes in May from 66,100 tonnes in April, provisional figures from the International Aluminium Institute showed on Monday. Total production in May was 2.060 million tonnes compared with 1.983 million tonnes in April. Total production in May 2009 was 1.966 million tonnes.

June 19 - Alcoa and state-controlled Saudi Arabian Mining Co <1211.SE> have started work on a plant that would be the world's largest fully integrated aluminium complex, Maaden said. The $10-billion Maaden-Alcoa joint venture will start by developing a fully integrated industrial complex, consisting of a bauxite mine at Ba'aitha and an alumina refinery, aluminium smelter and rolling mill at Ras Al-Zour, it said in a statement.

June 15 - Alcoa said it continued to assess the damage to its Aviles aluminium smelter in Spain, hit late last week by a severe flood to the region and was working to reduce the impact on customer shipments from the plant.

June 11 - China produced 6,783,000 tonnes of primary aluminium in the first five months of this year, up 49.3 percent from the same period last year. Output of alumina rose by 46.4 percent over the same period to 12,286,000 tonnes.

June 11 - Leading base metal producer China posted a record level of primary aluminium output in May, but a slower rate of production is expected in June as low prices spur cuts by smelters.

June 10 - Aluminium producers will be forced to shut down smelters if the metal price remains at current levels, the chief executive of the world's biggest aluminium producer said in an interview. Russian tycoon and UC RUSAL <RUAL.PA><0486.HK> head Oleg Deripaska told the Financial Times the fall in the aluminium prices meant many producers were struggling to cover production and distribution costs.

PRICES

Aluminium prices ended June at $1,977.50 a tonne, down from $2,043 a month earlier.

The market fell sharply around the beginning of the month as concerns intensified about global metal demand from key consumers, including China.

The LME three-months aluminium price dropped to $1,828, its lowest since last October.

Sentiment picked up after that, enabling the market to steady. But demand prospects remain a worry for market watchers.

LME three month aluminium prices on an official kerb close basis fell 14.87 percent at the end of the second quarter from the first quarter. They were down 11.32 percent from the end of 2009.

In January, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash aluminium price <MAL0> at $2,094 a tonne in 2010.

STOCKS

Total exchange stocks fell to 4.918 million tonnes at the end of June, equating to just over 46 days of demand. At the end of May they totalled 5.051 million tonnes.

Of the end-June total, some 4.422 million tonnes were held in LME warehouses, down from 4.556 million a month earlier.

Total visible stocks, including latest International Aluminium Institute unwrought stocks were 6.169 million tonnes, down from 6.261 million tonnes a month earlier.

Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka rose 7.5 percent to 204,800 tonnes at the end of May. They climbed for the first time in three months and hitting levels not seen since January, data from trading house Marubeni Corp <8002.T> showed. But they fell 15,8 percent from a year earlier.

Figures released on Monday showed stocks at the three ports totalled 201,500 tonnes.


 

Key Words:  Aluminum Al  market movement 

ALUMINIUM-Major Market Developments in June

Industry News 08:55:45AM Jul 20, 2010 Source:SMM

LONDON, July 20 -- The global aluminium market remains in over-supply and prices will stay under pressure as global economic worries persist and inventories build over the quieter period for demand in the northern hemisphere summer, some analysts say.

"I see stocks accumulating over the quieter summer period and the next big move in prices is on the downside," said independent consultant Angus MacMillan.

He expected prices to fall towards $1,850/$1,800 a tonne, citing a deteriorating economic environment in Europe and Japan and thought $1,700 was a possible target at some point during the third quarter.

"Sentiment is certainly going to suffer," he said.

Credit Agricole analyst, Robin Bhar, thought prices would be largely range bound in the next month or so.

He thought movements would be determined mainly by macro-economic news rather than aluminium's own fundamentals.

Bhar said the $1,800 level might be tested, but he expected it to emerge intact.

At 1206 GMT the London Metal Exchange three-months aluminium price <CMAL3> was indicated at $2,025 a tonne.

Neil Buxton, managing director at GFMS Consulting said he was cautious about plans to idle 700,000 tonnes of capacity in China's Henan province.

"Unless those numbers are confirmed we're reluctant to change our view, which is one of quite large over-supply," he said.

Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in 2010.

PRODUCTION:

June 30 - India has ordered a new panel to investigate if Vedanta Resources Plc's <VED.L> plans to mine bauxite could impact local tribes and wildlife, possibly further delaying a project already running about two years late. An Environment Ministry statement said the four-member committee would investigate the "specific impact on the livelihood, culture and material welfare" of a local tribal group in eastern Orissa state. It was to submit its findings in 30 days.

June 29 - State-controlled Saudi Arabian Mining Co <1211.SE> said its board had agreed on a $4.5 billion financing plan for the first phase of a joint aluminium plant with U.S. firm Alcoa <AA.N>. [ID:nLDE65S1IP] The joint venture started work on the $10 billion complex, which it said will be the world's largest fully integrated aluminium complex, earlier this month.

June 28 - A plan to idle 700,000 tonnes of annual aluminium capacity by 13 smelters in China's Henan province could prompt other firms to follow suit if prices stay weak. The announced capacity cuts are likely to be in place by early July as low prices and high costs hit profitability at the units, Liu Libin, vice-chairman of the Henan Nonferrous Metals Industry Association, told Reuters, adding the smelters had started production cuts in the middle of June.

June 25 - Alcoa Inc said it ratified a new four-year contract with the United Steelworkers union covering 5,400 employees at ten of its locations in the United States.

June 22 - Alcoa said its Fjardaal smelter in Iceland had been a success and that the company might consider other investment on the island, which has been hit by a deep economic crisis.

June 21 - Daily average primary aluminium output in China falls to 45,700 tonnes in May from 46,400 tonnes in April, provisional figures from the International Aluminium Institute showed. Total primary aluminium production in China rose to 1.418 million tonnes in May from 1.392 million tonnes in April and 984,000 tonnes in May last year.

June 21 - Daily average primary aluminium output rose to 66,500 tonnes in May from 66,100 tonnes in April, provisional figures from the International Aluminium Institute showed on Monday. Total production in May was 2.060 million tonnes compared with 1.983 million tonnes in April. Total production in May 2009 was 1.966 million tonnes.

June 19 - Alcoa and state-controlled Saudi Arabian Mining Co <1211.SE> have started work on a plant that would be the world's largest fully integrated aluminium complex, Maaden said. The $10-billion Maaden-Alcoa joint venture will start by developing a fully integrated industrial complex, consisting of a bauxite mine at Ba'aitha and an alumina refinery, aluminium smelter and rolling mill at Ras Al-Zour, it said in a statement.

June 15 - Alcoa said it continued to assess the damage to its Aviles aluminium smelter in Spain, hit late last week by a severe flood to the region and was working to reduce the impact on customer shipments from the plant.

June 11 - China produced 6,783,000 tonnes of primary aluminium in the first five months of this year, up 49.3 percent from the same period last year. Output of alumina rose by 46.4 percent over the same period to 12,286,000 tonnes.

June 11 - Leading base metal producer China posted a record level of primary aluminium output in May, but a slower rate of production is expected in June as low prices spur cuts by smelters.

June 10 - Aluminium producers will be forced to shut down smelters if the metal price remains at current levels, the chief executive of the world's biggest aluminium producer said in an interview. Russian tycoon and UC RUSAL <RUAL.PA><0486.HK> head Oleg Deripaska told the Financial Times the fall in the aluminium prices meant many producers were struggling to cover production and distribution costs.

PRICES

Aluminium prices ended June at $1,977.50 a tonne, down from $2,043 a month earlier.

The market fell sharply around the beginning of the month as concerns intensified about global metal demand from key consumers, including China.

The LME three-months aluminium price dropped to $1,828, its lowest since last October.

Sentiment picked up after that, enabling the market to steady. But demand prospects remain a worry for market watchers.

LME three month aluminium prices on an official kerb close basis fell 14.87 percent at the end of the second quarter from the first quarter. They were down 11.32 percent from the end of 2009.

In January, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash aluminium price <MAL0> at $2,094 a tonne in 2010.

STOCKS

Total exchange stocks fell to 4.918 million tonnes at the end of June, equating to just over 46 days of demand. At the end of May they totalled 5.051 million tonnes.

Of the end-June total, some 4.422 million tonnes were held in LME warehouses, down from 4.556 million a month earlier.

Total visible stocks, including latest International Aluminium Institute unwrought stocks were 6.169 million tonnes, down from 6.261 million tonnes a month earlier.

Estimated aluminium stocks at the Japanese ports of Yokohama, Nagoya and Osaka rose 7.5 percent to 204,800 tonnes at the end of May. They climbed for the first time in three months and hitting levels not seen since January, data from trading house Marubeni Corp <8002.T> showed. But they fell 15,8 percent from a year earlier.

Figures released on Monday showed stocks at the three ports totalled 201,500 tonnes.


 

Key Words:  Aluminum Al  market movement