Australian aluminum industry is struggling on the brink of life and death.

Published: Sep 16, 2020 16:18

Source: Mandarin Finance and Economics

Save

[Australian Aluminum is on the brink of life and death] Australia's aluminium smelters are being excluded from the global market because of high energy costs, unless they can find a way to generate cheaper electricity, according to the head of an international aluminium producer. Or face closure. "any aluminum producer will take a very serious look at the viability of their factories," said Miles Prosser, director of the (IAI) of the International Aluminum Association. "if you look at comparisons of global electricity prices, which are key determinants of smelter competitiveness, Australia is currently at a fairly high level."

SMM: Australian aluminum smelters are being excluded from the global market because of high energy costs and will face closure unless they can find a way to generate cheaper electricity, according to the head of an international aluminum producer.

The warning comes as smelters around the world are under pressure from falling demand triggered by the novel coronavirus epidemic, which has become one of London's worst-performing base metals. Australia produced more than 1.5 million tonnes of aluminium in the year to June 2020, ranking sixth in the world, according to government estimates.

"any aluminum producer will take a very serious look at the viability of their factories," said Miles Prosser, director of the (IAI) of the International Aluminum Association. "if you look at comparisons of global electricity prices, which are key determinants of smelter competitiveness, Australia is currently at a fairly high level."

High electricity prices raise the cost of the country's smelters. The country's industry is still paying too much for natural gas, which is the main driver of wholesale electricity prices. The national competition regulator said it reported in August that although prices fell in 2020, the decline was not consistent with a larger decline in the global LNG market.

Long before the outbreak, Alcoa (Alcoa) had been evaluating options at its Portland plant. Alcoa is likely to close the smelter after a four-year financial support agreement with the government expires next year. Three of Rio Tinto's smelters, including the largest in Tomago, are also under threat after commodities giant (Rio Tinto) announced the closure of its smelter in Cape Tivai, New Zealand, earlier this year.

"Click to understand and sign up: 2020 China Automotive New Materials Application Summit Forum

Scan the QR code above to view the business cards of the participating companies and sign up online

Scan the code and apply to join the SMM Automotive Industry Exchange Group.

Aluminum aluminum bars mining production capacity

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

4 hours ago

Alumina Futures 2605 Contract Retreats After Rally Amid Weakening Momentum

Last night, the alumina futures 2605 contract showed a pattern of retreating after a rapid rise. In the early night session, it attempted a rebound, reaching a high of 2,844 yuan/mt, but subsequently, momentum weakened, and it closed at 2,811 yuan/mt, with gains narrowing. In terms of volume structure, trading volume surged significantly by 47,000 lots to 160,000 lots, while open interest decreased against the trend by 11,000 lots to 286,000 lots, indicating limited market willingness to chase highs and clear signs of funds exiting at elevated levels. The technical setup remains constrained by a bearish alignment, with the short-term moving average system—MA5 (2,820.8) and MA10 (2,820.3)—converging and exerting direct resistance on the futures, while the MA30 (2,829.57) further constitutes a medium-term resistance level. Overall, the futures exhibit weak adjustment characteristics, marked by increased volume without corresponding price gains and a pullback accompanied by reduced open interest.

4 hours ago

The market has entered holiday mode, with prices remaining stable overall, awaiting recovery post-holiday. [SMM Cast Aluminum Alloy Morning Comment]

[SMM Cast Aluminum Alloy Morning Comment: Market Enters Holiday Mode with Prices Mainly Stable, Post-Holiday Recovery Awaited] Post-holiday price trends will return to the interplay between supply-demand and cost factors. If enterprises maintain a normal pace of production resumptions while downstream order recovery falls short of expectations, the price center risks declining under pressure. If phased restocking occurs after the holiday, coupled with primary aluminum prices holding up well, ADC12 prices are expected to see a corrective rebound. Overall, before end-use demand shows substantial improvement, prices are likely to maintain a fluctuating trend in the initial post-holiday period, still moving within the pre-holiday range, with direction depending on the strength of demand recovery and the performance of primary aluminum prices.

4 hours ago

5 hours ago

US Stock Market Plunge Coupled with AI Concerns Triggers Sharp Decline, Aluminum Prices Under Pressure in the Doldrums [SMM Aluminum Morning Meeting Minutes]

[SMM Aluminum Morning Meeting Minutes: AI Concerns Triggered a Broad Decline in Risk Assets, Aluminum Prices Under Pressure and in the Doldrums] Overall, the bullish sentiment in the nonferrous metals market cooled down, coupled with high inventory pressure on the fundamentals, aluminum prices were in the doldrums this week. During the Chinese New Year holiday, the domestic market was closed, while the LME market continued trading. Be cautious of fluctuations in the macro market and the LME market during the holiday, which may cause volatility in aluminum prices after the holiday.

5 hours ago