|May 2006||National Research Flagship||Light Metals|
Demand for aluminium to boost alumina exports
Thanks in part to the 2008 Beijing Olympics, China is leading the world in aluminium consumption, with flow-on effects for our alumina production sector. Kate Penney from ABARE (Australian Bureau of Agricultural and Resource Economics) prepared this summary…
World aluminium consumption is projected to grow at an average annual rate of 4.3% to an estimated 40.7 million tonnes in 2011.
China is expected to be the major driver of growth. Continued population growth and rising per capita incomes are likely to lead to stronger domestic demand for aluminium in cars, consumer durables and construction.
The rate of growth in Chinese aluminium smelting capacity, however, may ease as the Chinese government attempts to rationalise the industry.
With strong consumption growth and slower smelter capacity growth, China is expected to become a significant net importer of aluminium over the medium term.
Alumina capacity expansion
Australia's alumina production and export capacity is projected to increase significantly over the medium-term, reflecting the construction of substantial new alumina refinery capacity, which is now ramping up, committed or in prospect.
Australia's export earnings from alumina are forecast to increase by 22% this financial year. Given the expected expansions to refinery capacity over the medium term, the country’s export shipments of alumina are projected to increase by 33% to 19.3 million tonnes in 2010-11.
In the medium-term, world aluminium production growth should slow, reaching an estimated 41.3 million tonnes in 2011.
Generally, capacity expansion is determined by the ability of aluminium smelters to secure competitive power contracts. Electricity accounts for an estimated 28% of smelter cash operating costs.
In developed countries, where aluminium smelters compete with industrial and residential users for power, it is becoming more difficult to replace or renew contracts at similar prices.
Therefore, smelter developments planned for the medium term may include integrated power projects, or gravitate toward countries with abundant energy resources such as Iceland and the Middle East.
While there have been studies conducted into expansions at Boyne Island and Gladstone in Queensland, there are no committed expansions in Australia over the medium term.
Aluminium prices are expected to ease as production outpaces consumption and stocks begin to rise. In 2011, real aluminium prices (in 2006 dollars) are projected to be around 25% lower than in 2005.
Table: (a) LME
(London Metal Exchange) cash prices for primary aluminium. (b) In 2006 US
dollars. (f) ABARE forecast. (z) ABARE projection. Sources: Commodity
Research Unit; London Metal Exchange; World Bureau of Metal Statistics;
ABARE. Click on image to view full scale.
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