NEW YORK Aluminium Bahrain BSC (Alba) would like to sell more of its material in North America, chief executive officer Tim Murray said in an interview at AMMs Aluminum Summit in New York.
"We have 70 percent of our sales in the Middle East, which is actually too much," Murray said. "We would like to diversify and put a little bit more of that into North America."
Alba currently sells about 4 percent of its production to North America, 11 to 12 percent to Europe and 15 percent to Asia. "We would like to balance that a little more, but where Asias at we probably want to stay (and) Europe we probably dont want to go much lower, so ... we probably need to take a little more into North America," he said.
Ideally, the company would like have a balance of 15 percent of sales in Asia, 10 percent in Europe and 10 percent in North America, Murray said. North America "is booming in terms of the physical market. It really is a market we would like to grow."
The long-term fundamentals in the United States are much better than they are in Europe, he said. "U.S. construction is OKits not at a super rate, but even a small uptick is a very big uptick in quantityso I think in terms of the housing market, its relatively stable and youre actually going to see some pickup. And automotive is booming; its out of control."
Should Albawhich recently joined the Aluminum Extruders Council (amm.com, March 18)enter the U.S. market with its billet and foundry products, it would be a long-term commitment, Murray said. "Were not looking to come in and leave again. If were coming in, were coming in for the long run." He added that North America has the "best premium net back today in the world."
The expected 2013 ramp-up of the 740,000-tonne-per-year Maaden smelter in Saudi Arabiaa joint venture of Pittsburgh-based Alcoa Inc. and Riyadh-based Saudi Arabian Mining Co.is likely to catalyze Albas push into other markets, according to Murray.
The Maaden smelter will "relieve some pressure" from Alba as it cant currently meet all the supply needs of its customers in the Middle East, he said. "Our customers ... all want more metal; even with all this capacity in the Middle East, most of its being exported. Alba is really the only one that is selling in Bahrain."
The Saudi Arabian market is set for strong demand going forward, with the construction sector growing 8 to 10 percent per year, Murray said. "The market needs the metal. So if you look at us, we lose a little share (to Maaden) but in terms of our absolute volume I dont think it will change much."
Given the strong returns in North America, Alba would "happily sell" there if it had metal"but we actually dont have the metal" Murray said.
The company is looking at bringing on new output and is aiming to complete a feasibility study on a sixth production line by the end of the year. Should the sixth line go ahead, it would add about 400,000 tonnes of capacity at a cost of about $2.5 billion, Murray said.
The company also is not opposed to moving upstream as a cost-controlling method, given that it currently buys all of its raw materials externally. "If we found the right aluminum bauxite project, we would be interested," Murray said, although the company would be more interested in an offtake agreement or an equity stake in such an asset rather than controlling and operating it. "Were not looking to run refineries."
Going forward, the most imminent challenge for Askar, Bahrain-based Alba and the industry as a whole is the ongoing disconnect between the aluminum price on the London Metal Exchange and the price in the physical market, Murray said.
In addition, the high premiums in the physical market have kept many producing when they may otherwise have cut production or gone out of business, he said. "Everyones sitting on the fence; no one wants to leave."