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rffrydr
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 Posted: Wed Mar 01, 2006 7:43 am Post subject: Aluminum |
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Like hydropower once Chinese get started on something big it's hard to stop them:
"Aluminium has a bee in bonnet about accelerated smelters closures. But IAI data showed output in January held are record levels," ABN AMRO analyst Nick Moore, said.
He noted alumina imports into China were up 78 percent year on year to 780,000 tonnes in January, a fresh record.
"This bodes ill for those looking for a reduction in aluminium production.
"We have seen an additional 300,000 tonnes of reported stocks since end of 2005. During the whole of 2005 reported stocks rose by just 5,000 tonnes," he said, adding that market now appeared in surplus.
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rffrydr
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rffrydr
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| Posted: Mon Jul 21, 2008 7:45 am Post subject: |
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It's taken a year but it's taken hold:
http://www.forbes.com/reuters/feeds/reuters/2008/07/21/2008-07-21T040541Z_01_SHA285784_RTRIDST_0_MARKETS-METALS-UPDATE-1.html
While all looked to smelting slowdown as bullish...that assumes there wasn't already enough. --Cartoon over cliff.
Overlooked in chinese metals production was the extent to which the industry was used as a conduit for FDI, the dollar carry-trade in the context of the unique Chinese world-wide diaspora. Without the currency appreciation and with the administrataive crackdown on this practice last month...
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rffrydr
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| Posted: Mon May 26, 2008 9:09 pm Post subject: |
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Exchange-based stocks (kitco link above) have taken quite a pop post chinese new year.
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rffrydr
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| Posted: Tue Apr 29, 2008 6:29 am Post subject: |
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Supply of aluminium paper perceived still in short supply. Rusal to bypass London (politics and value) and get some of that aisian demand on top of the top-line:
http://www.ft.com/cms/s/0/0461f36c-148d-11dd-a741-0000779fd2ac.html
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rffrydr
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rffrydr
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rffrydr
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rffrydr
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| Posted: Wed May 23, 2007 8:49 am Post subject: |
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| Quote: | Fans of Alcoa Inc.'s $27 billion bid for Canadian rival Alcan Inc. might be overlooking the rising threat of competition from elsewhere, particularly China.
The outlook for aluminum prices isn't nearly as strong as it is for other raw materials in part because producers world-wide are having less trouble developing new supplies. This is especially true in China, where aluminum companies have been adding new smelting capacity at a furious pace.
This means that output from Western companies like Alcoa won't necessarily be needed to feed China's soaring demand. Aluminum demand is growing rapidly and may double by 2020 to 60 million metric tons of production, with much of it driven by consumption in China, according to Alcoa's estimates. Last year, China accounted for 25% of the world's aluminum consumption, compared with 13% six years earlier.
In a worst-case scenario, if China adds capacity faster than expected and global economic growth slows, that could lead to a significant drop in aluminum prices.
"We think China is the main risk factor to the aluminum market over the next year or so," says Michael Lewis, global head of commodities at Deutsche Bank AG in London. He adds that long-term aluminum prices could stay relatively high due to the rising costs of production.
Since supplies of aluminum aren't nearly as tight as they are for other commodities, the outlook for aluminum prices isn't as robust as it is for many other metals. While global nickel prices have shot up roughly fivefold over the past three years, and copper has roughly tripled, aluminum has only climbed about 70%.
None of this means that Alcoa's offer for Alcan, if approved, will go badly. On the contrary, a number of analysts and shareholders applaud the planned acquisition, in part because they believe it will give Alcoa more heft to compete with emerging competitors overseas.
Although Alcoa shares closed yesterday on the New York Stock Exchange at $37.63, down $1.10, they are still trading near 52-week highs after jumping significantly following the Alcan bid announcement.
Also, China might not be able to flood the world with its excess aluminum supply because of production disadvantages. For one thing, China is short of the raw materials needed to make the metal, including bauxite, which it must import. And, the electrical power needed to make aluminum, the second most energy-intensive industry on earth, is high. Officials in Beijing, however, oppose diverting scarce energy resources to make aluminum for export.
But unlike its scramble for other commodities, China has had little problem meeting its own aluminum needs -- and then some. China accounted for about two-thirds of the world's supply growth over the past 10 to 15 years. By 2006, China had the capacity to make almost 12 million metric tons of aluminum, or about 30% of the world's total, according to Alcoa.
Leading the charge is Aluminum Corp. of China Ltd., also known as Chalco. Once an afterthought in the global aluminum business, it is now China's biggest producer of aluminum. And it is second only to Alcoa as a world-wide producer of alumina, which is made by refining bauxite.
Shares of the state-controlled company, with a market value of more than $13 billion, are traded in Hong Kong and Shanghai and as American depositary receipts in New York. Chalco's ADRs ended yesterday's Big Board session at $30.84, down 44 cents. |
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rffrydr
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rffrydr
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| Posted: Sat May 12, 2007 8:25 pm Post subject: |
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It's all about China. Note GS estimate of off-exchange stash:
Alain Belda, chief executive of Alcoa, has an interesting line in explaining big takeovers. Talking about the bid he has just launched for Alcan, Mr Belda said: "You have to be bigger than the hole you can fall in." But what if taking on that extra weight risks tipping you over the edge?
It's easy to see why Alcoa wants to link up with its Canadian rival to form the world's biggest aluminium group, not least in order to prevent Alcoa itself being taken out. After two years of fruitless talks, Alcoa has embarked on the risky path of a hostile bid. In that time, long-term aluminium futures have risen by almost half. That appears to have given Alcoa the courage now to launch what is, in effect, a leveraged buy-out. Including retirement provisions, the bid implies pro forma net debt of Dollars 42bn - 3.9 times total 2007 earnings before interest, tax, depreciation and amortisation.
Deleveraging quickly would depend on disposals and on aluminium prices staying strong. Industry consolidation ought to mean better discipline on capital investment and pricing. The difficulty is knowing whether China - the marginal aluminium producer with surplus capacity - would also exercise restraint on output. Goldman Sachs estimates that, currently, China's off-exchange stocks of aluminium might be more than double official inventories. Certainly, in spite of repeated run-ups towards Dollars 3,000 a tonne, worries about surplus metal have capped aluminium's price. If prices moderate, a highly leveraged producer might face the unappetising prospect of cutting its own output to reduce slack in the market.
That Alcoa's shares have risen 8 per cent since the bid might suggest investors are bullish on aluminium's prospects. However, until Monday the equities market seemed more sceptical, with Alcoa's shares flat since the start of 2004, even as aluminium prices rose. Investors probably think that, given possible regulatory hurdles and a list of potential interlopers, Alcoa might well fail to win a bid battle for Alcan. But in taking the plunge anyway, Alcoa has highlighted its own vulnerability to a takeover.
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rffrydr
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| Posted: Wed Apr 18, 2007 12:43 pm Post subject: |
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Looks like Hedge Funds are anticipating this substitution of aluminium for copper--but are they counting on stainless? Right now cost competitive on per/pound basis. But if Posco keeps putting it out there.....then there's the nickel problem:
http://www.purchasing.com/article/CA6429350.html?industryid=2151
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rffrydr
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| Posted: Thu Mar 02, 2006 7:11 am Post subject: |
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And those are just the stocks you CAN see. In times like these the LAST place metals are kept is in the official warehouses.
Mexico has taken the fun out of my basemetals short. Though the spread was surprisingly tame last days. And silver, despite closure of its biggest mine down there could barely eek out a gain.
Spreaking of (in re China):
"... Bank of China, that country's top foreign exchange lender, would allow depositors to buy and sell gold products with their dollar accounts, as part of a new service to retain wealthy clients."
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