Global aluminium output has skyrocketed in the first quarter of 2013 - predominantly in China – leading prices to fall to $1800 per tonne. The World Bureau of Metal Statistics estimates overproduction in the first two months of the year at 317,000 tonnes despite an increase in demand in the same period to 7.6 million tonnes – a rise of 472,000 tonnes.

RUSAL Strategy and Business Development Director Oleg Mukhamedshin says;

‘Now we can already talk about an aluminium overproduction crisis, which is impacting prices negatively. Around 25% of the global aluminium capacity is losing money today, which obviously is forcing producers to slash output and shut down inefficient capacity’

RUSAL is forecasting a closure of between 1 and 1.5 million tonnes worldwide, with the exception of China, which should assist the rise of prices and see a decrease in output even before the summer. It is expected that China will not reach a decision on aluminium production until July or August.

Mukhamedshin goes on to state that the world’s largest aluminium producers need to reduce production by 10-12% in order to create a situation where price is led by demand, ‘Otherwise, the crisis in the industry will only get worse.’

That being said, aluminium overproduction has a beneficial effect on demand, and global consumption will increase by 6% in 2013 to 50 million tonnes. This is due to increased activity in key aluminium consuming industries such as electric engineering, automotive manufacturing and construction. The highest growth rates are expected in China (9.5%), India (6%), North America (5%) and Russia and the CIS (4%).

Despite a reduction in prices caused by a crisis in overproduction, the outlook for 2013 remains positive with the combination of reduced output and growth in demand leading the international aluminium back to a state of demand-driven price. Even through the adverse economic situation in Europe, the rising demand for aluminium in the electric engineering sector will bolster demand.

Post By Marc