Aluminum price slide could cap smelter capacity
Aug 28, 2012 | 07:00 PM
| Suzy Waite
Aluminum prices have plummeted below smelters breakeven point and may still have further to fall, leading market participants to speculate that producers will curtail capacity in the near future.
The continuing European debt crisis, slower-than-expected demand from China and an uncertain investment climate pushed three-month aluminum prices down to $1,841 per tonne in early August, 21.6 percent below their 2012 peak of $2,349 in late February.
Analysts estimate that production costs for smelters generally are between $2,050 and $2,100 per tonne, which means the majority of smelters worldwide are operating at a loss.
Its pretty clear that a significant portion of the global smelting sector is operating at a loss, Nicholas Snowdon, an analyst with New York-based Barclays Capital Inc., told AMM. We estimate that in the world, excluding China, youve got nearly 5 million tonnes of capacity thats unprofitable based on average prices this year. ....
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