Saturday, November 9, 2013

The aluminum industry

The aluminum industry is highly cyclical, with prices subject to worldwide supply and demand so traders need to stay ahead of the curve. In the first quarter of fiscal 2012, Alcoa, Inc. (AA), the world leader in the production of primary aluminum, reported better than expected results on the back of growth in the aerospace and automobile sectors.
The company anticipates that global aluminum demand will go up by seven percent this year. It also expects that burgeoning demand for aluminum along with market related production cutbacks will lead to a global aluminum industry deficit of 600,000 metric tons in 2012. Region , in 2012, China and India are expected to lead with double digit growth. Russia and Brazil are projected to have four to five percent increases in aluminum consumption rates.  Alcoa believes that the long term prospects for aluminum remain bright and envisions that global demand for aluminum will double by 2020.
Alcoa's positive outlook  prices have been under pressure, prompting companies to cut back on production. Rio Tinto (RIO) plans to sell its aluminium assets and close its smelter in order to cut costs. Alcoa plans to close or curtail 390,000 metric tons, or approximately 12% of its global smelting capacity, in 2012. This will lower the company's cost position by 10 percentage points in smelting and  seven percentage points in refining, by 2015 and improve its competitiveness and bottom line.
Aluminum and Copper