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Aluminium/Bauxite

Aluminum premium bubble over? Just don’t tell the LME – by Andy Home (Reuters U.S. – October 7, 2015)

http://www.reuters.com/

LONDON – So is the aluminum premium bubble well and truly over? It certainly feels that way.

Japanese buyers have just secured a premium of $90 per metric tons over London Metal Exchange (LME) cash metal for their fourth-quarter shipments.

As recently as the first quarter of this year, Japanese premiums were at a record high of $425 per metric tons (468 tons).

Moreover, these Q4 2015 premiums are the lowest since the third quarter of 2009, marking a return to historical norms.

The scale of the collapse in Japanese premiums is partly down to specific local drivers but even that statement reflects a return to normality, where physical premiums don’t move in global lock-step but rather mirror regional supply-demand dynamics.

U.S. and European premiums are higher at around $155 and $120 per metric tons respectively but have fallen a long, long way since the start of this year.

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Aborigines have a right to economic development – by Wayne Bergmann (The Australian – September 30, 2015)

http://www.theaustralian.com.au/

In his victory speech, new Prime Minister Malcolm Turnbull announced: “There has never been a more exciting time to be alive than today and there has never been a more exciting time to be an Australian. We will ensure that all Australians understand that their government recognises the opportunities of the future.”

If federal, state and territory governments are to ensure that Aboriginal Australians are included in these “opportunities of the future”, it is obvious their first priority should be to support the economic initiatives of Aboriginal people.

Remarkably, some governments do not understand this. Take the most recent Queensland state governments.

On Cape York Peninsula near Aurukan, there’s $20 billion worth of bauxite waiting to be mined. The traditional owners of the area, the Wik and Wik Way people, eager to be part of the economic development of their region, formed a joint venture with an Australian mining company to create Aurukan Bauxite Developments and planned to mine the resource.

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BHP Billiton’s split may have lessons for Alcoa – by James Regan (Reuters U.S. – September 29, 2015)

http://www.reuters.com/

SYDNEY – In what could be a cautionary tale for Alcoa Inc, global miner BHP Billiton’s decision to spin off non-core businesses into a separate company is yet to pay off for shareholders.

Alcoa announced on Monday it will break itself in two, separating a faster growing plane and car parts business from traditional alumina and aluminum production as shareholders seek higher returns amid a commodity slump.

BHP used a similar rationale for ring-fencing select operations in Australia, southern Africa and South America into what became South 32 last May to concentrate on its most profitable commodities.

South32 shares fell to a record low on Tuesday of A$1.38, more than a third below its listing price. BHP stock, at A$21.61 at Australia’s Tuesday close, is the lowest in seven years.

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How Alcoa Inc’s split could finally bring it together with Alcan – by Jonathan Ratner (National Post – September 29, 2015)

The National Post is Canada’s second largest national paper.

Alcoa Inc.’s plans to split into two publicly traded companies isn’t expected to be completed until the second half of 2016, but that won’t stop it from looking to the future, which may mean some big acquisitions down the road.

Dividing the upstream and downstream businesses will draw attention to the company’s sum-of-the-parts valuation, but Michael Gambardella at J.P. Morgan doesn’t think that represents real value creation. The analyst thinks the plan could lead to modestly higher overhead costs and won’t generate any savings.

He suggested Alcoa would be wise to take a second step and combine the upstream business with another large aluminum producer, which should create significant additional value in a depressed metal price environment.

“This potential value creation could occur from significant cost cutting opportunities with greater scale and better market conditions from supply cuts, and potentially from further consolidation activities triggered by such a transaction,” Gambardella told clients.

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Alcoa to split into two as aluminum glut batters legacy business – by Nick Carey (Reuters U.S. – September 28, 2015)

http://www.reuters.com/

CHICAGO – Alcoa Inc (AA.N) said Monday it will break itself in two, separating its faster growing business manufacturing parts for planes and automobiles from its traditional aluminum smelting operations as shareholders seek higher returns amid a commodity slump.

Pressured by a 42 percent drop in its share price this year and a surge in Chinese aluminum exports, Alcoa is splitting into two publicly traded companies focusing on smelting and higher-tech products. It is joining a wave of major corporations which this year have divested business to add shareholder value.

Alcoa shares jumped 2.4 percent to $9.29 as analysts applauded its intensified focus on products for expanding businesses like aerospace and auto.

The stock surge made the 127-year-old company the biggest percentage gainer on the benchmark S&P 500 index.

The global glut of aluminum, which has depressed prices, has battered Alcoa stock, driving the company’s market value this year down to about $12 billion.

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Aluminum Isn’t the Answer – by Adam Minter (Blomberg View – September 25, 2015)

http://www.bloombergview.com/

Some of the world’s top manufacturers have seized upon a simple way to reduce the carbon footprint of their products: Use more aluminum. Ford is now cladding its best-selling F-150 pickup in the lightweight metal to achieve better fuel efficiency; Apple is going a step further and switching to aluminum produced using – among other means – low-carbon hydropower.

Several big aluminum manufacturers are discussing a “green” aluminum certification to encourage such low-carbon manufacturing and charge a premium for it, according to Bloomberg News.

All this is laudable, of course. But it ignores something important. The true test of how “green” a product is can only be decided once it completes its life cycle and the materials used to produce it are recycled or thrown away. Unfortunately, the focus on the front end often obscures what happens to these trucks, mobile phones and even beer cans over the long run.

Apple offers a textbook case. The most interesting feature of its new iPhone 6s isn’t the better selfie camera, 3D touch technology, or even the pink aluminum case. Rather, it’s the 15 percent reduction in greenhouse-gas emissions expected to be produced over the life cycle of the phone compared to the iPhone 6.

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Alcoa completes $300 million expansion to boost aluminum output for auto industry – by Dave Flessner(Chattanooga Times Free Press – Septmeber 24, 2015)

http://www.timesfreepress.com/

Lightweight metals leader Alcoa announced today it has completed its $300 million expansion at its Tennessee facility dedicated to supplying aluminum sheet to the automotive industry.

The plant will provide aluminum sheet to automakers that include Ford Motor Company, Fiat Chrysler Automobiles and General Motors. The expansion is projected to add about 200 full-time jobs.

Tennessee Governor Bill Haslam and other state and local officials will celebrate the expansion with a ribbon cutting event this afternoon.

The project in Blount County, Tenn., which began customer shipments earlier this month, is Alcoa’s second major automotive expansion in North America backed by long-term customer contracts. The first, in Davenport, Iowa, reported record volume of automotive sheet shipments in the second quarter of 2015, up approximately 200 percent from the second quarter 2014.

“Automakers are demanding lighter, stronger materials that improve the performance of their vehicles and Alcoa is at the forefront of capturing that demand,” Alcoa CEO Klaus Kleinfeld said.

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China’s rising output, price rout deepen aluminum industry gloom – by Luc Cohen (Reuters U.S. – September 21, 2015)

http://www.reuters.com/

NEW YORK, Sept 21 (Reuters) – Sinking aluminum prices and a ballooning surplus of the metal have deepened the industry’s worst crisis in years, intensifying pressure on high-cost smelters to embark on another round of production cuts to revive prices from their malaise.

The 25 percent drop since last September has pushed benchmark London Metal Exchange prices to six-year lows, and the unprecedented plunge this year in premiums, surcharges paid for physical delivery, to their lowest in 3-1/2 years are the biggest test for producers’ margins since the 2008 financial crisis.

More than 10 percent of smelting capacity outside of China, or 3.5 million tonnes of production, is running in the red with a combined LME and U.S. premium of $1,800 per tonne, according to Wood Mackenzie data from second-quarter results. On Friday, three-month aluminum was at $1,621, with a U.S. premium of $175 a tonne.

The data illustrates the increasing pain across the sector as producers worry about growing exports from China and production costs such as power remain relatively high.

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Aluminum Makers Call for `Green’ Trademark to Sell at a Premium – by Yuliya Fedorinova (Bloomberg News – September 21, 2015)

http://www.bloomberg.com/

The biggest aluminum producers are discussing the introduction of a “green” trademark for the lightweight metal that could be sold at a premium and encourage carbon footprint reductions among rivals, United Co. Rusal’s deputy chief executive officer said.

“Since many of consumers, such as the car industry, are working on becoming more nature-friendly, the issue of clean aluminum output becomes important,” Oleg Mukhamedshin said in an interview last week. As an example, “even if a car with an aluminum body enables lower CO2 emissions, more pollution could have been caused by the company producing that metal, which damages the idea of clean vehicles.”

Automakers including Ford Motor Co. are turning to aluminum as they seek to reduce vehicle weights to meet stringent fuel-efficiency requirements. In 2014, Rexam Plc approved a program to cut its cans’ carbon footprint by 25 percent through 2020, the packaging company said in a 2015 report. Energy comprises most of the aluminum industry’s costs, and carbon dioxide generated by fossil fuels such as coal makes up almost 60 percent of global greenhouse-gas emissions, according to the U.S.

Environmental Protection Agency.

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Guinean Boom in Top-Quality Bauxite Set to Boost Economy – by Franz Wild and Ougna Camara (Bloomberg News – September 21, 2015)

http://www.bloomberg.com/

Red bauxite powder mined by Guinea’s biggest producer — flowing past a mangrove swamp on a conveyor belt and plunging through a giant funnel into the Rio Tamara ship — has been the country’s steadiest source of income since it was first mined four decades ago.

The company churning out the ore — owned by Rio Tinto Plc, Alcoa Inc., Dadco Alumina & Chemicals Ltd. and the government — will also lead a new wave of investment that may spur the West African nation’s economy and more than double bauxite output, which is refined and then smelted into aluminum.

Compagnie des Bauxites de Guinee’s $1 billion plan will almost double its annual production to 28.5 million metric tons within five years, Chief Executive Officer Namory Conde said. Four other developments could see a further 20 million tons added to Guinea’s annual exports.

“There’s going to be a lot more bauxite coming out of Guinea,” Conde said at CBG’s headquarters in the town of Kamsar, where the ship was being loaded. “Our quality is much better than around the world.

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Petcoke: the ticking time bomb at the heart of aluminum – by Andy Home (Reuters U.S. – September 16, 2015)

http://www.reuters.com/

LONDON – The world is producing too much aluminum. That’s what the price says. London Metal Exchange metal for three-month delivery is currently trading just above $1,600 per tonne, a level which is simply not sustainable for many higher-cost producers.

There have been plenty of smelter closures and curtailments. But not enough, particularly in China, which is exporting its surplus to the rest of the world in the form of semi-fabricated products.

Widespread allegations that some of these are “fake semis” have added extra heat to already simmering trade tensions. Aluminum’s problems have a lot to do with the metal’s production process.

Bauxite, the key metallic input, is a commonly occurring mineral and one that can be easily scooped out of the ground without the need for “hard rock” mining.

That abundance of supply has been proven by Indonesia’s ban on exports of bauxite to China.

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Ford’s Bet On Lightweight Aluminum Is Just Beginning – by Joann Muller (Forbes Magazine – September 15, 2015)

http://www.forbes.com/

When Ford Motor redesigned the F-150 pickup from lightweight aluminum, many thought the company was crazy to risk messing with the successful formula behind its best-selling vehicle. There were other ways to meet tougher fuel economy standards than using costly aluminum, some competitors argued.

But rather than backing off, Ford is signaling it plans to use even more aluminum in future vehicles, including its new super-duty trucks, which go on sale next year.

The automaker is teaming up with aluminum supplier Alcoa AA +0.00% to develop future high-strength alloys that will be easier to form into complex shapes, giving engineers new freedom to incorporate the lightweight material into their designs.

Ford is the first automaker to use Alcoa’s new proprietary Micromill technology, which produces an aluminum alloy that is 40 percent more formable than today’s automotive aluminum and 30 percent stronger and 30 percent lighter than high-strength steel. It allows Ford to design complex, creased parts from aluminum that were not possible before, such as the inside panels of car doors and external fenders.

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Nickel, aluminium expected to trade higher in mid-September – by Anne Lu (International Business Times – September 15, 2015)

http://www.ibtimes.com.au/

Markets research firm Angel Commodities said base metals nickel and aluminium would experience a price hike by the middle of this month due to various positive global cues. Nickel, for instance, would be highly affected by Indonesia’s decision to continue its ban on unprocessed metals.

“ We expect nickel prices to trade higher in September 15 as Indonesia decided to retain its export ban on nickel ore, contrary to media reports suggesting the country may relax curbs to prop up its slowing economy,” a representative from Angel told Commodity Online .

Aluminium, on the other hand, will get a price boost on production upgrade from a giant Russian bauxite producer.

“ We [also] expect aluminium prices to trade higher in September 15 as supply glut concerns will likely get a breather as Russia’s Rusal, the world’s top aluminium producer, is considering capacity cuts of 200,000 tonnes a year this year,” the firm added.

Earlier this year, Rusal executive said that bauxite producers across the globe are forced to either cut production or completely shut operations down due to the losses obtained from weak global prices.

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Novelis manufacturing plant, once known as Alcan to generations of Kingstonians, marks 75 years in the city – by Steph Crosier (Kingston Whig-Standard – September 13, 2015)

http://www.thewhig.com/

From Alcan’s Kingston Works to Novelis Inc., the aluminum manufacturing plant is celebrating 75 years in the Limestone City.

“I think in the heyday there was 4,100 to 4,200 employees, three plants,” Jake Czyz, Novelis plant manager, told the Whig-Standard Saturday. “We pretty much say everybody in Kingston knows somebody who has retired or worked here at the plants.”

The Aluminum Company of Canada plant was built in 1940 to support the Allied effort during the Second World War. The plant — referred to as “the annex” — housed manufacturing and research facilities. During the 1960s and 1970s, the plant was responsible for the research and manufacturing of aluminum sheet metal, cans and supplies for major industries such as automotive, transportation, beverage and packaging.

Today, Novelis, a subsidiary of the Aditya Birla Group, has 25 operating facilities on four continents with approximately 11,500 employees. The Kingston location employs approximately 275 people and creates aluminum products for Ford, BMW, Mercedes, General Motors, Thyssen Krupp and Peterbilt.

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NEWS RELEASE: The Aluminum Association Concerned about CNIA Call for Removal of Export Tax on Primary Aluminum

 

http://www.aluminum.org

ARLINGTON, Va., Sept. 9, 2015 /PRNewswire-USNewswire/ — The Aluminum Association, which represents producers and suppliers to the North American aluminum industry, expressed strong concern today about a recent call for the removal of a long-standing 15 percent tax on primary aluminum exported from China.

The call came from the Chinese Non-Ferrous Metals Industry Association and “appealed to all relevant national authorities to eliminate as soon as possible the provisional export tariff on aluminum to achieve integration of domestic and international aluminum markets.”

The Chinese government, which relies heavily on imported bauxite, has long applied export taxes on primary aluminum as part of a broader strategy to discourage exports of energy-intensive products and emphasize sustainable, quality growth. The unilateral removal of these taxes could have unforeseen impacts on the balance of trade and the global aluminum market.

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