ISLE OF PALMS, S.C. Years
of recession and the lessons gleaned from those tough times
have helped aluminum producers cope with current low prices on
the London Metal Exchange, according to industry
The aluminum industry has grown
resilient after soldiering through five to six years of
economic challenges, Jean Simon, president of primary metals at
Montreal-based Rio Tinto Alcan Inc., said during a press
roundtable at the Aluminum Associations spring meeting in
Isle of Palms.
"We have learned to reorganize
ourselves, look at our costs and work with our vendors ... to
be sure that we are still in a good position to compete,
because it is a global market. And especially in North America,
there has been very good work on that side," he said.
Layle "Kip" Smith, president and
chief executive officer of Franklin, Tenn.-based Noranda
Aluminum Holding Corp., largely agreed. "Its an axiom in
any commodity industry that we compete globally on the basis of
our productivity and the ability to provide a cost-competitive
product," he said. "So I think fundamentally, we just practice
good commodity management."
The LMEs cash aluminum
contract ended the official session April 9 at $1,858.50 per
tonne, down 0.2 percent from $1,862 per tonne April 2 and 12.5
percent below the 2013 high of $2,123 per tonne recorded Feb.
15. The price dip has caused concerns about the aluminum
sectors profitability, and worries about whether the
industry could withstand a continued trend of sagging prices
amm.com, April 5).
Executives participating in the
press roundtable could not discuss specific price trends or
forecasts per association and antitrust policies, Aluminum
Association president Heidi Biggs Brock said.
Some attendees on the sidelines
of the conference expressed concerns about imports,
particularly from China and Indonesia, and the impact they
could have on commodity grades of aluminum in the North
American market. But aluminum executives largely downplayed
The industry has been able to
compete against imports in part because it learned to reduce
costs and grow closer to customers during the recession, Simon
said. "This is a key element for the customer: being able to
talk to us (and) receive their order, and it being what they
were expecting. When you are far away, it might be a bit
different. This is one of the competitive advantages that the
U.S. industry and North America in general has."
Some customers may go wherever
prices are lowest, but they are a minority, Simon said.
A spokesman for Pittsburgh-based
Alcoa Inc. sounded a similar note. "The cost of material is
only one element of your total cost structure. Sometimes you
might not buy something because its the cheapest thing,"
Smith, like Simon, stressed the
importance of open but fair trade. "Its about having a
level playing field and then doing what we do best, which is
compete," he said. "And I think as a producer, you have to be
thoughtful about competition from all quarters, not just