RUSAL Released 2011 Industry View and Outlook
OREANDA-NEWS. December 24, 2010. UC RUSAL (SEHK: 486, EuroNext: RUSAL/RUAL), the world’s largest aluminium producer, is presenting its review of the outlook for the global aluminium industry in 2011.
Highlights:
• Global demand for aluminium is expected to increase by 8% to 43.8 million tonnes in 2011
• Aluminium prices are forecast to be between USD 2,400-2,500 per tonne
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• RUSAL is well positioned to support the improving outlook for the global aluminium industry
Global aluminium consumption
Based on continuing robust demand for aluminium from
It is estimated that more than 20% of
RUSAL expects strong rebound in
The Japanese aluminium market may also show a continuation of growth in 2011, with consumption expected to grow by 4% in 2011 to 1.98 million tonnes on strong demand from the automotive and transport sectors as the weakening Yen will contribute to an increase in car exports.
Western European growth in aluminium consumption in 2011 is expected to be moderate as compared to other regions based on the recent financial problems experienced by several European Union members and the continuing high levels of unemployment in the Eurozone. However, a weaker Euro/US Dollar rate of exchange in 2011 may assist European exports and, in particular, car producers in
Russian aluminium consumption
RUSAL expects its Russian and CIS market sales to grow by about 22% to 928 thousand tonnes in 2011, mainly driven by a strong rebound in the machinery, construction and packaging industries. Looking further ahead, infrastructure spending for the construction of roads, buildings and transportation facilities is expected to support further aluminium growth in the medium to longer term together with large-scale projects such as the 2014 Winter Olympic Games and the hosting of the 2018 Football World Cup recently awarded to
The Company expects
Aluminum price and premiums
Looking forward to 2011, RUSAL expects aluminium prices to sustain a level of USD 2,400-2,500 per tonne supported by a positive underlying demand, while the continuing weakness in the US Dollar supports the investment in physical assets by investors.
Despite the current volatility in the forward aluminium price curve, RUSAL expects physical aluminium stocks tightness to remain for the foreseeable future, with evidence of financing transactions occurring for metal placed on warrant. Premiums are therefore expected to be supported at current levels, assuming the same level of regional economic activity.
RUSAL expects European Union premiums in the USD 180-195 per tonne range, USD 118-120 per tonne in
Aluminium stocks
Aluminium stocks are forecast to be stable in 2011 as financing transactions are still allowing investments in aluminium. Currently, most LME stocks are covered by financing transactions and will not be available until the end of 2011.
RUSAL foresees a number of physically-backed aluminium Exchange Traded Funds to be established in 2011. If introduced, they are expected to have a significant impact on demand for aluminium and balancing supply by locking up to 2-3 million tonnes of aluminium stocks for several years. RUSAL remains committed to supporting the creation of an Exchange Traded Fund for aluminium through the supply of metal to such a fund, subject to investor interest.
RUSAL believes that producers and consumers alike will continue to exercise strong control over inventories and capital tied up in stocks. This will define the structure of new contracts in the immediate future.
Alumina market
RUSAL expects strong growth in alumina prices in 2011 as more third party alumina sales are tracking spot market prices as global producers try to de-link the alumina price from aluminium.
The alumina spot market price may reach USD 400 per tonne level based on strong Chinese and other regions’ demands.
In August, RUSAL commenced selling its free alumina at prices formed by a basket of indices including Metal Bulletin, CRU and Platts. RUSAL believes that alumina contract prices and the LME aluminium price should be de-linked as they do not fully reflect growing production costs and capital expenditure. De-linking the alumina price from the aluminium price should promote fair pricing for this raw material and create new investment opportunities.
RUSAL’s response to consumption growth
RUSAL is well placed to support the improving outlook for the global aluminium industry. The Company’s Cost Efficiency Leader Programme has resulted in RUSAL ranking in the top 10% of most cost effective aluminium producers in the world.
RUSAL is expected to benefit across all regions through the resurgence of the automotive and transportation segments, which have been particularly supportive of aluminium extrusion and cast product output. Flat rolled products in
To meet increased demand, during 2010 RUSAL increased production at existing, low cost facilities, as well as at the modernised
With 85% of RUSAL’s aluminium production capacity located within
RUSAL will continue the BEMO and the Taishet aluminium smelter construction projects, its large-scale investment projects. Once completed, they are expected to add 1 million tonnes of aluminium capacity on an attributable basis.
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