Platts reported that US aluminum major Alcoa foresees a 2% decline in global aluminum demand in 2009 but with significant production cuts already announced by major producers around the world and with stimulus packages expected to revive major world economies.
Alcoa said that aluminum market could soon be balanced. The 2% drop is on top of a 3% decline in global demand seen in 2008, so the company is prepared to continue adjusting supply to demand.
Mr Klaus Kleinfeld president & CEO of Alcoa while speaking during a conference call this week said that the aluminum industry was caught in a perfect storm of historic proportions, as prices in second-half 2008 saw an unprecedented plunge while inventories swelled in London Metal Exchange warehouses. But on the positive side, inventory levels at Alcoa's customers are quite low, so the company should see rapid destocking once the economy rebounds. He said current inventory levels are only maintainable if demand went down further. "Once the economy turns, [restocking] will happens pretty instantaneously.”
Mr Kleinfeld said that global aluminum consumption in 2009 is expected to total just over 36 million tonne. Demand from China this year is expected to grow 9%, versus 3% growth in 2008; Europe, down 7% from down 9%; North America, down 10% from down 12%; Asia, excluding China, down 2% versus down 4%; CIS, up 3% versus down 2%; and Brazil, up 5% versus down 1% last year. "The decline in North America and Europe is not as dramatic.”
World production, meanwhile, is expected to be just under 36 million tonne this year. According to Alcoa, some 13% of the world's production is being curtailed, with most of that from China (21%), North America (15%) and Eastern Europe/Russia (12%). He noted that in Russia, the country is seeing a dramatic drop in demand, including key markets of automotive, aerospace and packaging. In China, the construction sector has seen a 40% plunge and automotive 70%. But the country's stimulus package should flow through the system quickly and generate direct demand.
(Sourced from Platts)
