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Aluminium restarts not just a matter of price

Issued at 2015-03-11



Non-Chinese aluminium production was unchanged in January, according to the latest figures from the International Aluminium Institute (IAI). 

Producers, it might be inferred, are still holding the line in terms of keeping capacity off-line in the face of low prices and historical stocks overhang.

Their continued discipline is a subject of much market conjecture, although the fear of restarts waxes and wanes with the price.

A combination of lower London Metal Exchange (LME) basis price and softer physical premiums, particularly in Europe, has seen the all-in price slide back to just above $2,100 per tonne from over $2,450 as recently as November.

That should, it follows, deter anyone from breaking ranks. But current regional production dynamics are more complex than a simple linear reflection of price.

New plants are ramping up even as older ones shutter up. Others are waiting in the wings. Capacity has already been restarted and expanded in Western Europe. And all the while China, where production is still trending steeply higher, is pumping out exports and undermining the price impact of others' self-discipline.


Source: Aluplanet



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