Reuters reported that Norsk Hydro, one of the world's top aluminum producers sees growth in global aluminum demand slowing next year as a result of economic turbulence.
Norsk Hydro which also owns alumina assets said it saw demand for primary aluminum outside China rising by 3% to 5% in 2012 after total demand growth slows to 7% in 2011 from 19% rise a year earlier.
Hydro which competes with US aluminum maker Alcoa Inc, Russia's RUSAL, and China's Chalco said that long term fundamentals remained solid and it aimed to come out strengthened from this period of uncertainty.
The company said that aluminum fundamentals remain promising due to the metal's many positive qualities including its light weight and recyclability and the global aluminum market is expected to show solid long term growth. At the first look there is not anything new here concerning the strategic direction.
Hydro said that it would present three scenarios for earning potential based on different levels of aluminum prices and exchange rates, in all of which its EBITDA would remain significantly above capital expenditure required for its existing facilities. It expects these expenditures to remain at NOK 3.5 billion in 2012 of which NOK 1 billion crowns would be spent on assets acquired from Brazil's Vale.
According to a graph in a presentation slide, in its most optimistic scenario, at an aluminum price of USD 2,750 it sees annual EBITDA of around NOK 14.5 to 16.5 billion. In the most pessimistic scenario with an aluminum price of USD 2,000, EBITDA is seen in the range of about NOK 6.5 billion to NOK 8.5 billion. The exchange rates between the crown and US dollars in the scenarios vary between 6.00 and 5.50.
Aluminum prices have declined in recent months on concerns about the euro zone crisis and its negative implications for demand. The London Metal Exchange three months aluminum price has fallen to just above USD 2,000 per tonne from its peak of USD 2,800 in May.
The company's USD 300 per tonne cost savings plan in its primary metals business introduced in late 2009 and seen completed in 2013 is now targeted to save USD 200 per tonne by the end of 2011 up from the USD 175 it announced in October. It said a further USD 100 per tonne is targeted by end 2013.
The company's said that its 50 50 Qatalum JV plant in Qatar was producing at 600,000 tonnes per year slightly above its nameplate capacity. Qatalum was launched in 2009 with a design capacity of 585,000 tonnes of primary aluminum.
Hydro, which earlier this year bought alumina and bauxite assets, including its Paragominas mine and the Alunorte alumina refinery from Vale said it is considering commercial opportunities and possibilities of growing the smelter portfolio.
(Sourced from Reuters)
