Aluminium prices lost ground in November and while persistent demand worries will weigh on sentiment, production cuts will limit further declines.

Standard Chartered analyst Mr Daniel Smith said that "A lot of the industry is under pressure because of these low prices, so there's going to be a lot of support if prices fall further, there's not that much downside.”

The London Metal Exchange three months aluminum price was last indicated at USD 2,005 a tonne.

Fastmarkets analyst Mr Will Adams mooted a target of USD 1,800 a tonne, given the subdued demand picture. At that level a concerted supply response should be seen.

Mr Harry Colvin of Longview Economics said that "We're well below Chinese costs and pretty much below western European costs of production, so I think the downside is limited for aluminium.”


On Monday, Dutch aluminium producer ZALCO said it was looking for a buyer to restart its smelter which was shut last Friday due to a lack of funds after the company filed for bankruptcy.

Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in the remainder of 2011 and into 2012.

PRODUCTION
Nov 21
Daily average primary aluminium output in October rose to 70,900 tonnes compared with a revised 70,700 in September and 67,700 in October 2010, provisional figures from the International Aluminium Institute show.

Nov 21
Daily average primary aluminium output in China fell to 48,100 tonnes in October, down from 52,700 tonnes in September, the provisional IAI figures showed.

Nov 14
Ten to 15 percent of world primary aluminium capacity will be shut down or mothballed if global prices remain at current levels into the first half of 2012, UC RUSAL's first deputy CEO said.

Nov 10
China produced 14,677,000 tonnes of primary aluminium in the first 10 months of the year, up 9.5 percent from the same period last year, according to the National Bureau of Statistics. Output of alumina rose by 16.2% over the same period to reach 28,932,000 tonnes.

Nov 9
Argentina's Aluar said it will not meet its expected output of 475,000 tonnes of aluminium this year as recent heavy rains flooded its smelter. The plant was expected to be fully operational in 90 days.

Nov 7
Alcoa Inc said it would spend USD 2.1 billion over five years to cut costs and raise output at three smelters in Quebec as part of its efforts to upgrade its operations. Alcoa's Baie-Cameau, Deschambault and Becancour smelters would get new 25-year power supply contracts in the Canadian province, the company said, which will help it to hike its production capacity by 120,000 metric tons per year and reduce its costs by 13 percentage points at those plants.

Nov 2
Alcoa has temporarily stopped producing certain ingots at its Becancour smelter in Quebec because of a quality problem, the company said. A spokesman said the company suspended production of its P1020 aluminum billet in late October as a result of high iron content and was talking with customers to mitigate the impact.

Nov 2
Guinea's alumina production rose 25.5 percent year-on-year in the first eight months of 2011 while output of bauxite was up 3.5 percent over the same period, according to a government report. Guinea, the world's top exporter of bauxite which usually ships about 13 million tonnes a year, produced 11.2 million tonnes of the aluminium ore between January and August, according to the report.

PRICES
Aluminium prices finished November at USD 2,110 a tonne down from USD 2,218 the previous month.

The market trended generally lower during the month on persistent worries about the euro zone crisis and its implications for economic growth and demand for industrial metals.

The month's low of USD 1,975.50, and aluminum’s lowest since July 2010, was reached on the last day of the month, although the market staged a bounce above USD 2,100, spurred on by news of a coordinated move by major central banks to provide liquidity to the financial system.

But the market failed to build on this move and by December 14 had fallen to USD 1,955.75, a new lowest level since July 2010. The psychological USD 2,000 a tonne level has since tended to keep a lid on prices.

(Sourced from Reuters)