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China Dominates the Global Aluminium Industry

May 22, 2009
    LONDON, May 22 /PRNewswire/ --
    - Roskill Information Services
    - The Economics of Aluminium (9th Edition)
    - http://www.roskill.com/reports/aluminium
    - New Report From Roskill Analyses Worldwide Aluminium Supply and Demand

China dominates the global aluminium industry accounting for one third of
both world production and world consumption of primary aluminium. While China
is self sufficient in aluminium metal and approaching self sufficiency in
alumina, dependence on imported bauxite remains high despite rising output.
However, power supply issues and high costs of production could result in
declining production in the longer term and the possibility that China will
become a net importer of primary aluminium.

Russia, Canada, the USA, Australia, Brazil, Norway and India are the
principal producing countries after China. These countries together account
for about three quarters of world output of primary aluminium.

Although some 200 smelters, half of which are in China, produce primary
aluminium, 14 companies operating about 100 plants controlled over 60% of
output in 2007. Consolidation of the Russian companies Rusal and Sual with
Glencore in 2006 into UC Rusal, and the acquisition of Alcan by Rio Tinto in
2007 resulted in two aluminium producers comparable in size to Alcoa.

World aluminium output rose by between 0.15 and 12.2%py between 1994 and
2008, averaging 5%py. Growth averaged around 7%py after 2001 mainly due to
explosive expansion in production in China. Output began to contract in the
second half of 2008 and this accelerated in 2009, meaning that world
aluminium production is likely to decline for the first time in fifteen years
and by as much as 5%.

In 2009, almost fifty aluminium smelter projects, with a total capacity
of 20Mtpy, were at various stages of development, but only 10, with a total
capacity of 2.8Mtpy, were already under construction. For most of these
projects, no decision with regard to timing had been finalised and the
timetables of the others are under review. At the same time, most of the
major producers are idling high cost and inefficient capacity in response to
low demand and prices.

The earliest major project to come on line will probably be Qatalum in
Qatar, which is likely to be a very low cost producer. During 2008, a new
300ktpy smelter started operations in Oman and UC Rusal restarted output in
Nigeria.

Reported production (which excludes as much as 2Mt in China) of refined
secondary aluminium and aluminium alloy amounted to about 8.8Mtpy in 2007,
mainly in the USA, Japan, Germany and Italy. A further 3 to 3.5Mtpy of
secondary aluminium is recovered directly into end-uses. US-based Aleris
International, owned by Texas Pacific and, formed in 2004 by the merger of
IMCO Recycling and Commonwealth Industries, is probably the world’s largest
aluminium recycling company. Novelis, which acquired Alcan’s secondary
facilities in the USA, and Hydro Aluminium North America are major aluminium
recyclers. Used beverage cans are the largest source of scrap and raw
material for secondary aluminium ingot.

Recovery in aluminium consumption to begin in 2010

Between 1998 and 2007, world primary aluminium consumption grew by a
year-on-year average of 5.6% to reach 37.2Mt. After a fall of 5.3% in 2001,
aluminium consumption increased by an average of 7.8%py up to 2007, largely
driven by Chinese consumption, which increased by an average of 23.7%py over
the same period. Chinese aluminium consumption is, by a sizeable margin, the
largest in the world, having overtaken that in the USA in 2004. Japan is the
third largest consuming country.

Total use of aluminium including all forms of secondary metal, amounted
to about 51Mtpy in 2007, and was probably little changed in 2008. Consumption
was divided regionally into about 44% in Asia and 27% each in Europe and the
Americas, while the major markets for aluminium were transportation (14% of
demand), construction (11%) and packaging (6%)

The Chinese market (almost 30% of the world total in 2007 and 2008)
expanded by about 27% in 2007; Antaike estimates that it increased by about
8% in 2008 and will increase by 3% in 2009. In Europe, North America and
Japan, demand will almost certainly fall in 2009 and will either level out or
show minimal growth in 2010. The market will start to recover in the second
half of 2010, and global growth of 4 to 5%, led by China, is likely in 2011.
Average growth in the global aluminium market to 2013 will probably be about
2.6%py resulting in total demand of about 58Mt.

Large stock overhang depressing prices

The LME monthly average cash price for high grade aluminium fell from
record high of US$3,070/t in July 2008 to US$1,329/t in February as LME
stocks increased from 1.1Mt to 3.2Mt. There were signs that prices had
bottomed out in March/April 2009, and had stabilised in a range between
US$1,400 and US$1,500/t. Lower production and the end of ‘destocking’ is
expected to stop or reverse the increase in inventories and push prices up to
between US$1,500 and US$1,700/t by September or October 2009, and they may
reach US$1,800t by year-end. In 2009, aluminium prices will probably average
US$1,400 to US$1,450/t. The large stocks are expected to overhang the market
until the slide in global demand is reversed, which most analysts expect to
happen in early 2010.

In the early and mid 2000s, cash production costs for primary aluminium
rose steeply to a global average of almost US$2,000/t, mainly because of
increased alumina and power costs. Alumina prices have fallen with those of
aluminium, but power costs remain high, and prices in early 2009 were less
than the costs of many producers.

Electrical power and alumina are the most costly inputs in the production
of primary aluminium. A secure, low cost and proximal supply of power is a
more important factor than either nearby raw materials or markets, when
deciding on a location for an aluminium smelter. The presence of large
smelters in Bahrain, Dubai, Oman, South Africa, Mozambique and Iceland is
evidence of this. Countries such as Canada and Norway take advantage of both
plentiful hydroelectricity and nearby markets. New smelters are under
construction in Abu Dhabi and Qatar to take advantage of gas resources.

    Table of
    Contents

                   Page

    1              Summary                                          1

    2              History, occurrence, properties and resources of 6
                   aluminium
    2.1            History                                          6
    2.2            Occurrence                                       7
    2.3            Properties                                       7
    2.4            Resources                                        9

    3              Aluminium production processes, costs and        11
                   electricity usage
    3.1            Production processes for primary aluminium       11
    3.1.1          The Hall-Heroult Process                         12
    3.1.1.1        Anodes and cathodes                              13
    3.1.1.2        The smelting cell                                14
    3.1.2          Other processes                                  15
    3.2            Primary aluminium production costs and           15
                   electricity usage
    3.2.1          Electricity usage in primary aluminium           18
                   production
    3.3            Environmental legislation                        24
    3.4            Secondary aluminium production processes         25
    3.5            Semi finishing of aluminium                      26

    4              World production data for refined unwrought      27
                   aluminium
    4.1            Primary aluminium world production data          27
    4.1.1          Regional production data                         32
    4.1.1.1        Asia                                             34
    4.1.1.2        Europe                                           35
    4.1.1.3        North America                                    36
    4.1.1.4        Oceania                                          36
    4.1.1.5        South America                                    37
    4.1.1.6        Africa                                           37
    4.1.2          Primary aluminium producing companies            38
    4.2            Secondary aluminium production data              43
    4.2.1          Secondary aluminium producing companies          46
    4.3            Outlook for primary aluminium production         47
    4.4            World aluminium stocks                           49

    5              Aluminium production and processing by country   53
    5.1            Abu Dhabi                                        53
    5.2            Algeria                                          53
    5.3            Argentina                                        53
    5.3.1          Producers of aluminium in Argentina              54
    5.3.1.1        Aluminio Argentino SAIC (Aluar)                  54
    5.3.1.2        Other companies                                  55
    5.4            Armenia                                          55
    5.5            Australia                                        55
    5.5.1          Producers of aluminium in Australia              57
    5.5.1.1        Rio Tinto Alcan                                  57
    5.5.1.2        Alcoa of Australia Limited                       59
    5.5.1.3        Hydro                                            60
    5.5.2          Aluminium projects in Australia                  60
    5.5.3          Secondary producers, remelters and               60
                   semi-manufacturers
    5.6            Austria                                          61
    5.7            Azerbaijan                                       62
    5.8            Bahrain                                          62
    5.9            Belgium                                          63
    5.1            Bosnia-Herzegovina                               64
    5.11           Brazil                                           65
    5.11.1         Producers of aluminium in Brazil                 66
    5.11.1.1       Aluminio Brasiliero S.A (Albras)                 67
    5.11.1.2       Consorcio de Aluminio de Maranhao (Alumar)       67
    5.11.1.3       Compania Brasilieira do Aluminio (CBA)           68
    5.11.1.4       Valesul Alumino S.A. (Valesul)                   68
    5.11.1.5       Alcoa Aluminio S.A.                              68
    5.11.1.6       Novelis do Brasil                                69
    5.11.1.7       Secondary producers and semi-manufacturers       70
    5.12           Brunei                                           70
    5.13           Cameroon                                         70
    5.14           Canada                                           71
    5.14.1         Primary production                               72
    5.14.2         Producers of aluminium in Canada                 73
    5.14.2.1       Rio Tinto Alcan                                  73
    5.14.2.2       Aluminiere Alouette Inc                          75
    5.14.2.3       Aluminiere de Becancour (Albecour)               76
    5.14.2.4       Alcoa Inc                                        76
    5.14.3         Secondary aluminium production                   77
    5.15           China                                            77
    5.15.1         Producers of aluminium in China                  81
    5.15.1.1       Aluminium Corp of China (Chalco)                 85
    5.15.1.2       Henan Yugang Longquan                            87
    5.15.1.3       Qingtongxia Aluminium Group                      87
    5.15.1.4       Yichuan Aluminium                                88
    5.15.1.5       Chiping Xinfa Huayu Aluminium                    88
    5.15.1.6       Mengdong Energy Group                            88
    5.15.1.7       Vimetco (Henan Zhongfu)                          89
    5.15.1.8       Qinghai Qiaotou Aluminium and Power              89
    5.15.1.9       Yunnan Aluminium Company Limited                 89
    5.15.1.10      Henan Wanji Aluminium                            90
    5.15.1.11      Binzhou Weiqiao Aluminium                        90
    5.15.1.12      Henan Shenhuo Aluminium Power                    90
    5.15.1.13      East Hope                                        91
    5.15.1.14      Guangyuan Qimingxing                             91
    5.15.1.15      Chongqing Xipeng Aluminium Industrial Park       91
    5.15.1.16      Kam Kiu Aluminium Products                       91
    5.15.1.17      Panzhihua Pearl Aluminium                        91
    5.15.1.18      Baoding Longda Aluminium Industry                92
    5.15.1.19      M.C. Nikkei Aluminium (Kunshan)                  92
    5.15.1.20      Shanghai Sigma Metals                            92
    5.15.1.21      UC Rusal/China Power Investment                  92
    5.16           Colombia                                         92
    5.17           Croatia                                          93
    5.18           Dubai (United Arab Emirates)                     93
    5.19           Egypt                                            94
    5.2            Finland                                          94
    5.21           France                                           94
    5.21.1         Producers of aluminium in France                 96
    5.21.1.1       Rio Tinto Alcan                                  96
    5.21.1.2       Secondary aluminium producers                    96
    5.22           Germany                                          97
    5.22.1         Producers of aluminium in Germany                99
    5.22.1.1       Trimet Aluminium                                 99
    5.22.1.2       Hydro                                            99
    5.22.1.3       Corus Aluminium Voerde GmbH                      100
    5.22.1.4       Aleris Recycling                                 101
    5.22.1.5       Other producers                                  101
    5.23           Ghana                                            102
    5.24           Greece                                           102
    5.24.1         Producers of aluminium in Greece                 103
    5.24.1.1       Aluminium de Grece                               103
    5.24.1.2       Other producers                                  104
    5.25           Greenland                                        104
    5.26           Hungary                                          105
    5.27           Iceland                                          105
    5.27.1         Producers of aluminium in Iceland                106
    5.27.1.1       Alcan Iceland                                    106
    5.27.1.2       Nordic Aluminium (Nordural)                      106
    5.27.1.3       Alcoa Fjaroaal                                   107
    5.28           India                                            107
    5.28.1         Producers of aluminium in India                  109
    5.28.1.1       Hindalco Industries Limited                      110
    5.28.1.2       National Aluminium Company Limited (Nalco)       112
    5.28.1.3       Vedanta Resources                                112
    5.28.1.4       Jindal Steel Works                               113
    5.28.1.5       Ashapura Minechem                                114
    5.28.1.6       Larsen & Toubro                                  114
    5.28.1.7       Other producers                                  114
    5.29           Indonesia                                        116
    5.3            Iran                                             117
    5.31           Italy                                            118
    5.31.1         Producers of aluminium in Italy                  119
    5.31.1.1       Alcoa Italia SpA                                 119
    5.31.1.2       Secondary aluminium smelters, remelters and      119
                   extruders
    5.32           Japan                                            121
    5.32.1         Producers of aluminium in Japan                  122
    5.32.1.1       Nippon Light Metal Company (NLM)                 122
    5.32.1.2       Daiki Aluminium                                  123
    5.32.1.3       Nikkei MC Aluminium                              123
    5.32.1.4       Asahi Seiren                                     124
    5.32.1.5       Other producers                                  124
    5.33           Kazakhstan                                       125
    5.34           South Korea                                      126
    5.35           Libya                                            127
    5.36           Malaysia                                         127
    5.37           Mexico                                           128
    5.38           Montenegro                                       130
    5.39           Mozambique                                       130
    5.4            Netherlands                                      131
    5.40.1         Producers of aluminium in Netherlands            131
    5.40.1.1       Corus Primary Aluminium                          131
    5.40.1.2       Klesch & Co                                      132
    5.40.1.3       Other companies                                  132
    5.41           New Zealand                                      133
    5.42           Nigeria                                          133
    5.42.1         Aluminium Smelter Company of Nigeria (Alscon)    133
    5.42.2         Other companies                                  134
    5.43           Norway                                           134
    5.43.1         Producers of aluminium in Norway                 136
    5.43.1.1       Hydro A/S                                        136
    5.43.1.2       Elkem Aluminium                                  137
    5.43.1.3       Sor-Norge Aluminium (Soral)                      138
    5.43.1.4       Other companies                                  138
    5.44           Oman                                             138
    5.45           Poland                                           138
    5.45.1         Aluminium Konin-Impexmetal                       139
    5.45.2         Remelters and secondary aluminium smelters       139
    5.46           Qatar                                            140
    5.47           Romania                                          141
    5.48           Russia                                           142
    5.48.1         UC Rusal                                         143
    5.48.2         Secondary producers, remelters and fabricators   146
    5.49           Saudi Arabia                                     147
    5.5            Slovakia                                         147
    5.51           Slovenia                                         148
    5.52           South Africa                                     150
    5.52.1         Billiton Aluminium SA                            150
    5.52.2         Coega project (Rio Tinto Alcan)                  151
    5.52.3         Other projects and companies                     152
    5.53           Spain                                            152
    5.53.1         Producers of aluminium in Spain                  153
    5.53.1.1       Alcoa Spain                                      153
    5.53.1.2       Secondary smelters and remelters                 154
    5.54           Suriname                                         154
    5.55           Sweden                                           155
    5.56           Switzerland                                      156
    5.57           Taiwan                                           156
    5.58           Tajikistan                                       157
    5.59           Trinidad and Tobago                              158
    5.6            Turkey                                           158
    5.60.1         Producers of aluminium in Turkey                 159
    5.60.1.1       Eti AlÃ"¦Ãƒ“šÃ‚±minyum AÃ"¦Ãƒ“¦Ã‚¾                               159
    5.60.1.2       Processors and secondary producers               159
    5.61           Ukraine                                          160
    5.62           UK                                               161
    5.62.1         Producers of aluminium in the UK                 162
    5.62.1.1       Alcan Smelting & Power                           162
    5.62.1.2       Anglesey Aluminium                               162
    5.62.1.3       Secondary aluminium                              163
    5.63           USA                                              163
    5.63.1         Producers of primary aluminium in USA            167
    5.63.1.1       Alcoa Inc                                        168
    5.63.1.2       Century Aluminium Corporation                    170
    5.63.1.3       Columbia Falls Aluminium                         171
    5.63.1.4       Kaiser Aluminium Corporation                     171
    5.63.1.5       Northwest Aluminium                              171
    5.63.1.6       Ormet Corporation                                172
    5.63.1.7       Norandal USA                                     172
    5.63.1.8       Rio Tinto Alcan                                  173
    5.63.2         Producers of secondary aluminium in USA          173
    5.63.2.1       Aleris Recycling                                 175
    5.63.2.2       Novelis                                          175
    5.63.2.3       Hydro                                            176
    5.64           Venezuela                                        176
    5.64.1         Producers of aluminium in Venezuela              177
    5.64.1.1       Industria Venezolana de Aluminio CA (CVG         177
                   Venalum)
    5.64.1.2       Aluminio del Caroni SA (CVG Alcasa)              177
    5.64.2         Secondary production                             178
    5.65           Vietnam                                          178

    6              World consumption of aluminium                   179
    6.1            Consumption of primary aluminium                 179
    6.1.1          Consumption of primary aluminium by country      179
    6.1.2          Consumption of primary aluminium by region       184
    6.1.2.1        Asia                                             186
    6.1.2.2        America                                          187
    6.1.2.3        Europe                                           187
    6.1.2.4        Other regions                                    187
    6.2            Total aluminium consumption                      187
    6.3            Consumption of aluminium by use                  190
    6.4            Consumption of aluminium by product              193
    6.4.1          Aluminium flat rolled products                   196
    6.4.2          Cast aluminium                                   198
    6.5            Outlook                                          200

    7              Uses of aluminium                                202
    7.1            Use of aluminium in transport applications       206
    7.1.1          Motor vehicles                                   209
    7.1.2          Railways                                         222
    7.1.3          Aerospace                                        224
    7.1.3.1        Commercial aerospace                             225
    7.1.3.2        Military aerospace                               228
    7.1.3.3        Aluminium aerospace alloy developments and
                   competing materials                              230
    7.1.4          Marine                                           232
    7.1.5          Other transport applications                     233
    7.1.6          Outlook for aluminium demand in transport        233
    7.1.6.1        Motor vehicles                                   233
    7.1.6.2        Aerospace                                        235
    7.1.6.3        Marine and railways                              236
    7.2            Use of aluminium in building and construction    237
    7.2.1          World markets for aluminium in construction      238
    7.2.2          Outlook for consumption of aluminium in          242
                   construction
    7.3            Use of aluminium in electricity and electronics  243
    7.3.1          Electricity transmission and distribution        243
    7.3.2          Telecommunications                               245
    7.3.3          Building wiring                                  245
    7.3.4          Winding wires and electrical equipment           246
    7.3.5          Electronics                                      246
    7.3.6          Outlook for the use of aluminium in electrical   247
                   applications
    7.4            Aluminium use in containers and packaging        248
    7.4.1          Beverage cans                                    250
    7.4.1.1        Markets for aluminium in beverage cans           252
    7.4.2          Other forms of aluminium packaging               257
    7.4.3          Recycling of packaging materials                 259
    7.4.4          Outlook for the use of aluminium in packaging    261
    7.5            Machinery and equipment                          262
    7.6            Consumer durables                                263
    7.7            Other uses                                       265
    7.7.1          Metallurgy                                       266
    7.7.1.1        Steel refining                                   266
    7.7.1.2        Steel alloying                                   271
    7.7.1.3        Aluminothermic reduction                         272
    7.7.1.4        Galvalume and Galfan                             272
    7.7.2          Batteries                                        273
    7.7.3          Hydrogen storage                                 273
    7.7.4          Semiconductors                                   274
    7.7.5          Other applications                               274

    8              Analysis of international trade data for         277
                   aluminium
    8.1            International trade in unwrought aluminium       277
    8.1.1          Exports of unwrought aluminium                   277
    8.1.2          Imports of unwrought aluminium                   282
    8.2            International trade in semi finished aluminium   286
                   products
    8.2.1          Exports of semi finished aluminium products      286
    8.2.2          Imports of semi finished aluminium products      291
    8.3            International trade in aluminium scrap           295
    8.3.1          Exports of aluminium scrap                       295
    8.3.2          Imports of aluminium scrap                       300

    9              Prices of aluminium and aluminium alloy          304
    9.1            London Metal Exchange                            304
    9.1.1          Aluminium products sold under LME contracts      306
    9.1.2          LME pricing                                      306
    9.1.2.1        Historic trends in aluminium prices on the LME   307
    9.2            Chinese aluminium markets                        319
    9.3            Secondary and scrap aluminium prices             320
    9.4            Outlook for aluminium prices                     321

The Economics of Aluminium (9th Edition 2009) is available at GBP2400 /
US$5000 / EUR4000 from Roskill Information Services Ltd. 27a Leopold Road,
London SW19 7BB, England. Email: info@roskill.co.uk
http://www.roskill.com/reports/aluminium

SOURCE Roskill Information Services


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