WORLD CAPACITY AND MARKET REPORT PRIMARY ALUMINIUM

摘要

Demand for aluminium remains strong, but there are some indications that the growth of demand might be slowing. LME prices have continued a massive surge in recent weeks over dollar 2500. This may be excessive in relation to the fundamentals of the market, but high production costs and shortage of energy and raw materials indicate that prices over dollar 2000 are justified. The market will remain tight through the whole of 2006, with stocks well below normal and any weakness in 2007 seems likely to be short-lived, with a strong market and high prices again in 2008 and 2009. Insufficient new capacity is currently committed to supply the market beyond 2009, but high energy prices make decisions on new smelter projects difficult. In the short term the risk is on the up side - any disruption to energy or alumina supply could cause severe metal shortage. In the medium term the risk is on the down side - rising inflation and interest rates, with reduced consumer purchasing power, creating a sharp downturn in consumption.