LONDON, Jul 26, 2011 (Dow Jones Commodities News Select via Comtex) --Demand for aluminum is expected to grow at a rate of around 7% in 2011, according to Norwegian producer Norsk Hydro ASA (NHY.OS), but a "manageable" market surplus is still expected due to the ramp up of additional production capacity.
The company said demand and supply of primary aluminum in the world outside China increased slightly during the second quarter compared with the first quarter, amounting to annualized consumption and production rates of 26.2 million metric tons and 26.5 million tons respectively.
In contrast, consumption in China "increased significantly" in the first half of 2011, Hydro said. In the second quarter annualized consumption amounted to 20.2 million tons, and the Chinese primary aluminum market is expected to be largely balanced for 2011, Hydro noted.
"We remain optimistic about the prospects for aluminum demand, however, recent increased uncertainty due to a more volatile macro environment and sovereign debt issues may result in increased demand fluctuations in the coming months," said company chief executive Svein Richard Brandtaeg.
Elsewhere, demand for metal products--including extrusion ingot, sheet ingot, primary foundry alloys and wire rod--remained stable with no significant change from the previous quarter in most regions, the company noted.
However, demand for extrusion ingot in southern Europe has softened as a result of the weaker regional economic developments, Hydro added.