Home News

Bloomberg: aluminum demand has been in the doldrums

Good quality Aluminium Profiles for sales
Good quality Aluminium Profiles for sales
Customer Reviews
We have been using YueFeng Aluminium as a supplier for a number of years, however since the new management team took over responsibility about four years ago they have become not only a supplier they have become a strategic partner supplying not only parts to our business but also solutions and advances in extruded Aluminium components.

—— Bretti--Manufacturing Director

YueFeng continue to provide excellent manufactured products and offer services aligned perfectly to our requirements. They are able to dovetail into our fluid sales requirements whilst consistently delivering to schedule.

—— Gavin Sykes--Managing Director

Your products are very popular in our market.

—— Mr. Clive

Good Quality, Best Service supplier that we met until now.

—— David Little

You always can give me the best plan ,and it lets my customer feel great,i hope we can have another chance to cooperation.

—— Michael

I'm Online Chat Now
Company News
Bloomberg: aluminum demand has been in the doldrums
Bloomberg: aluminum demand has been in the doldrums

According to Bloomberg News, aluminum is not the worst-performing base metal this year, but copper is. However, this is only because its decline is small: demand has been falling before the coronavirus forced about 3 billion people to stay at home.

Coupled with the near-complete closure of the global car and aviation industries and the squeeze of more than 1/3 of demand, the light metal is rapidly reaching levels last seen during the global financial crisis.

As the epidemic forced Alcoa (Alcoa Corp.). Long-delayed decisions by producers such as (Rio Tinto Group), the Rio Tinto group, should lead to some sharp production cuts in the mining industry.

Aluminum is a continuously underperforming industry, with the largest actual loss of any base metal since 1913, according to Bloomberg (Bloomberg Intelligence). Demand has been slowing for a decade, and even before the crisis, surpluses were expected this year. Prices have fallen below $1500 a tonne for eight consecutive weeks. This makes most of the world's production unprofitable.

The metal has never been good at responding quickly to changing markets. This is partly due to the low cost of mining raw materials for bauxite. At the same time, because of the fixed cost such as electricity, the smelter that uses its oxide to produce aluminum metal has slow production speed and high cost.

As a result, the industry is still taking advantage of inventories accumulated during the last crisis. Against this backdrop, it is not surprising that China's aluminium production increased in the first two months of this year.

The scale and speed of the decline in demand caused by the coronavirus will test the resilience of the industry. Aircraft makers are considering cutting production, while carmakers have shut down from Japan to Germany.

The premium paid by Japanese buyers to (LME) on the London Metal Exchange is at its lowest level in more than three years. In closed economies, car sales fell by 80%. Other sources of demand, such as machinery, are not much better. Although consumers are hoarding canned food, this accounts for only a small portion of aluminum use.

Analysts at BMO LLC estimated late last month that global primary aluminium demand could fall 6 per cent by 2020 from a year earlier, similar to that in 2008, but the absolute amount could be greater.

This is not the most accurate estimate, but they say it has led to an unsustainable surplus of 4.2 million tonnes, or about 5% of global demand.

During the global financial crisis, and a few years later in 2015, when cheap Chinese metals flooded the market, aluminum giants cut spending. Even if China announces the full contents of its stimulus package, it will not mitigate the impact of this year to a large extent. According to a report by (Boston Consulting Group), a Boston consulting firm, Chinese consumption outside China fell 17% in 2009, while domestic consumption grew by 15 per cent. This time, even Chinese consumption may take years to fully recover.

There are some gratifying signs. (Norsk Hydro ASA), a Norwegian company, said last week that it would postpone the reopening of its Husnes plant. Analysts at CRU Group estimate that China has cut capacity by about 365000 tons.

Even if low-cost production by companies such as China Hongqiao is spared, more production is under way: Russian giant United Co.Rusal estimated in mid-March that more than 1/4 of China's smelters, equivalent to 10 million tons of annual capacity, were losing money at 13000 yuan ($1830) per metric ton. Businesses that are less environmentally friendly will suffer disproportionate losses.

At the same time, Rio Tinto is already evaluating its Tiwai Point smelter in New Zealand and ISAL smelter in Iceland, and now needs to seriously consider the capital allocated to the lowest-margin sector.

All these cuts and more cuts are necessary, especially as demand weakness persists. Bank of Montreal (BMO) forecasts that spare capacity will reach 4.2 million tons per year by the third quarter and increase to 10 million tons per year by 2025. There are also many unknowns, from how long the downturn will last to the level of demand of traders looking to bet on future market strength. For now, it is hard to see anything other than a bleak outlook without a significant reduction in supply.

Pub Time : 2020-04-08 16:01:31 >> News list
Contact Details
YueFeng Technology Co., Ltd

Contact Person: Mr. James Wong

Tel: 0086 186 6296 3676

Send your inquiry directly to us (0 / 3000)